Calculating Your Startup’s Burn Rate and Runway – Fundraising Kingdom

Overview

For any founder using FounderFlow, maintaining a clear pulse on your cash flow is the difference between a successful Series A and a quiet shutdown. This article explains the core metrics our platform tracks to keep your investor dashboard accurate and your company solvent.

1. Gross Burn vs. Net Burn

Understanding where your money goes is the first step in financial transparency.

Gross Burn: This is the absolute total of all operating expenses your company pays out each month (rent, salaries, AWS credits, etc.).
Net Burn: This is the "real" amount of money you are losing. It is calculated by taking your Gross Burn and subtracting your monthly revenue.

Note: If your Net Burn is negative, congratulations—you are "default alive" and cash-flow positive.

2. Calculating Your Runway

Your Runway is the most critical metric for your investor updates. It represents the number of months your company can continue to operate at its current spending level before running out of capital.

To calculate this, FounderFlow uses the following formula:

3. Why This Matters for Investors

Investors look at your Runway to determine your "fundraising window." Ideally, you should begin your next fundraising round when you still have 6 to 9 months of runway remaining.

4. How to Update These Metrics

You can automate these calculations by connecting your bank account via our Plaid Integration (see our related article) or by manually uploading your monthly CSV statements to the FounderFlow Financials tab.