Calculate monthly burn rate, net burn, and months of runway. Plan fundraising timing.
Allow 4-6 months for fundraising. Start raising with at least 6 months of runway remaining.
Burn rate is the speed at which a company spends its cash reserves before generating positive cash flow. For startups, it is perhaps the most important operational metric because it determines how much time you have.
Gross burn is your total monthly spending. Net burn subtracts any revenue. A company spending 100,000 per month with 40,000 in revenue has a net burn of only 60,000, giving significantly more runway.
The golden rule: start raising when you have 6-9 months of runway remaining. Fundraising typically takes 3-6 months. Starting too late puts you in a weak negotiating position.
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