---
title: "What Is Gross Burn?"
term: "Gross Burn"
description: "Gross burn is the total cash a company spends per month before offsetting any revenue—measuring raw spending pace independent of income."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/gross-burn
---

# What Is Gross Burn?

> Gross burn is the total cash a company spends per month before offsetting any revenue—measuring raw spending pace independent of income.

**Gross burn** is monthly cash outflows before revenue— the gross spending rate that shows how expensive the operation is to run.

## How it works

Calculate gross burn by summing operating cash payments in a month: salaries, contractors, cloud, marketing, rent, and other opex. Ignore customer collections for this metric. **Net burn** subtracts cash revenue collected in the same period—often the number founders cite for runway because it reflects net cash loss. A company with $500k gross burn and $200k monthly revenue has $300k net burn. Gross burn highlights cost structure; net burn highlights survival timeline. Both matter when modeling the next round size and hiring plan.

## Why it matters

- **Founders:** Separate gross from net when cutting costs—revenue growth can mask bloated gross burn until growth stalls.
- **Investors:** Compare gross burn to headcount and GTM strategy; high gross burn with weak revenue may require larger rounds or sharper efficiency plans.

## Common mistake

Reporting net burn while investors model on gross burn for downside scenarios where revenue dips—always show both in board materials.

## Related ideas

Net burn, runway, [free cash flow](/glossary/free-cash-flow), and default alive versus default dead framing.

## FAQ

### What is gross burn in simple terms?

Gross burn is how much cash goes out the door each month—payroll, rent, servers, everything—without subtracting money customers paid you.

### Why does gross burn matter?

It shows the true cost base. Even with growing revenue, high gross burn means you still depend on fundraising until net burn turns toward zero.


---
Source: https://venturecapitaltracker.com/glossary/gross-burn