Every startup founder dreams of growth — but the silent killer of that dream isn’t competition or marketing.
It’s running out of cash.
No matter how good your product or team is, if you don’t know how long your money will last, you’re building blind.
That’s where Burn Rate and Runway come in — two critical numbers that every founder must understand, track, and optimize.
Let’s break them down in simple, actionable terms 👇
1️⃣ What Is Burn Rate?
Burn Rate is the amount of money your startup spends each month to operate — before you become profitable.
💡 Formula:
Burn Rate = Total Monthly Expenses – Total Monthly Revenue
For example 👇
If you spend ₹10,00,000 per month and earn ₹4,00,000, your burn rate is ₹6,00,000/month.
💬 Insight: The higher your burn rate, the faster you’re using your cash reserves — and the shorter your survival window.
2️⃣ What Is Runway?
Runway tells you how many months your startup can survive before it runs out of cash — at your current burn rate.
💡 Formula:
Runway = Current Cash ÷ Monthly Burn Rate
Example:
If you have ₹60,00,000 in the bank and a burn rate of ₹6,00,000/month,
Runway = 10 months.
That means you have 10 months to either increase revenue, reduce expenses, or raise funding before hitting zero.
3️⃣ Why These Metrics Matter (Especially in Early Stages)
Understanding your burn rate and runway gives you clarity and control.
They help you:
✅ Make better hiring and spending decisions
✅ Plan your fundraising timeline
✅ Manage investor expectations
✅ Avoid financial panic
💬 Think of it like oxygen in a scuba tank.
You can dive as deep as you want — but you must know how much air (cash) you have left.
4️⃣ Types of Burn Rate
There are two kinds every founder should track 👇
🟢 Gross Burn:
Total cash spent every month — including all operating costs.
Example: Salaries, rent, ads, tools, hosting, etc.
🔵 Net Burn:
Gross Burn minus monthly revenue.
Example: If you spend ₹10,00,000 but earn ₹3,00,000 → Net Burn = ₹7,00,000.
💡 Insight: Investors focus on Net Burn — because it shows how efficiently you’re growing.
5️⃣ How to Manage (and Reduce) Your Burn Rate
You can’t eliminate burn, but you can control it strategically.
Here’s how 👇
1. Audit Your Expenses
Track every rupee. Remove non-essential tools, subscriptions, or overhead.
💡 Use tools like Notion, Zoho Books, or QuickBooks to monitor real-time spending.
2. Negotiate Smartly
Renegotiate vendor contracts or switch to more affordable alternatives.
💬 Every 10% saved adds weeks to your runway.
3. Hire Lean, Automate Often
Instead of over-hiring early, use automation for marketing, onboarding, and analytics.
💡 Example tools: Zapier, HubSpot, or ClickUp.
4. Prioritize Revenue-Generating Activities
Focus on what directly brings cash in — not just what looks good on paper.
Test new revenue streams, upsells, or pricing models.
5. Plan Fundraising Before It’s Urgent
Start raising funds when you still have 6–9 months of runway left.
Desperation reduces leverage — planning builds confidence.
6️⃣ How Investors View Burn Rate and Runway
Investors analyze your burn rate to judge capital efficiency — how wisely you use money to achieve results.
💬 If your burn is high but traction is low, it’s a red flag.
💬 If your burn is moderate with visible growth or learning, it’s a good sign.
💡 Pro Tip:
When presenting to investors, pair your burn rate with growth KPIs like CAC, LTV, and revenue trajectory. It shows you’re spending smart, not just spending fast.
💡 Alepp Platform Insight
At Alepp Platform, we help founders bring financial clarity to their business through structured Business Planning Frameworks and Investor Readiness Programs.
We teach entrepreneurs how to calculate burn rate, extend runway, and design growth strategies that attract funding — without unnecessary financial stress.
Because clarity isn’t just a mindset — it’s a financial survival skill.
🚀 Conclusion
Your startup’s burn rate and runway tell you one thing: how long you can keep building before the money runs out.
Track them monthly.
Review them quarterly.
Optimize them continuously.
💡 Remember:
Running a startup without watching your burn is like flying a plane without checking fuel.
You can’t afford to ignore it.
Manage your numbers — and your numbers will manage your future.