Burn rate is how much cash a company spends per month beyond what it brings in. Divide it into cash on hand and you get runway: how many months are left.
Gross burn is total monthly spend. Net burn subtracts revenue coming in, and it's net burn that actually determines runway. A company with $480,000 in the bank and $60,000 in monthly net burn has 8 months before it hits zero.
Burn rate isn't inherently good or bad. A company burning aggressively to hit a growth milestone before the next raise can be making the right call, and one burning slowly with no plan to grow can be making the wrong one. What matters to an investor is whether the burn is buying something specific, and whether the founder can say what without hesitating.
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