Monthly Burn Rate (MBR) vs Cash Runway (CRW)
Burn rate and runway are two sides of the same coin for early-stage and growth-stage companies. Burn rate measures how fast you spend cash; runway tells you how long that cash will last at the current burn. Investors track both to assess whether a company needs to raise, cut costs, or accelerate toward profitability.
At a Glance
Monthly Burn Rate (MBR)
Average monthly cash outflows exceeding revenue
Cash Runway (CRW)
Number of months a company can operate with current cash and burn rate
Key Differences
- Burn rate is a monthly dollar amount; runway is the result of dividing cash by monthly net burn.
- Net burn (burn minus revenue) is more meaningful than gross burn for companies with revenue.
- Extending runway can be achieved by raising revenue, cutting costs, or raising new capital.
- Typical board convention: maintain at least 12–18 months of runway before starting a fundraise.
When to Use Each
Use Monthly Burn Rate (MBR) when…
Use burn rate to measure spending velocity and to identify cost trends. Gross burn tracks total spending; net burn subtracts revenue.
Full Monthly Burn Rate guide →Use Cash Runway (CRW) when…
Use runway to answer the most urgent question for pre-profitability companies: how many months until we run out of money?
Full Cash Runway guide →Formulas
MONTHLY BURN RATE (MBR)
Burn Rate = (Starting Cash - Ending Cash) / Number of Months
Total Operating Expenses - Total RevenueCASH RUNWAY (CRW)
Runway (months) = Total Cash on Hand / Monthly Burn Rate
Charts
Monthly Burn Rate (MBR)
Cash Runway (CRW)