How much are we burning each month?
№ 222 · Burn rate trend
Definition
MetricMonthly net cash burn and its rate of change
Unitpercent change in monthly net burn, year over year, with absolute burn in currency on the same chart
Single line of monthly cash burn over time. Pull cash outflows minus inflows from accounting. Watch direction more than absolute number. Spikes correlate with hiring waves or non-recurring events. Example: $1.4M Jan to $2.1M Aug (deteriorating, investigate non-recurring vs run rate).
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| net burn up 30 percent or more year over year with revenue growth flat or decelerating | net burn up roughly 8 percent year over year at growth stage in a normal year, stepping up about 50 percent in the twelve months after a round closes | net burn flat or falling while net new revenue grows, so the burn change runs 15 or more points below the revenue growth rate |
VC-backed private technology companies, seed through Series C, 2024 to 2025, net burn defined as operating cash out minus cash in and excluding financing flows · This card is scored on shape rather than level because absolute monthly burn is not comparable across stage, geography or business model. The most useful published reference is SVB's finding that burn rose about 50 percent and revenue growth about 75 percent in the year after a raise, which sets the normal post-round shape. The stage-level dollar figures that circulate widely, roughly $25k a month at pre-seed, $80k at seed and $350k at Series A, trace back to vendor blogs citing Carta rather than to a locatable Carta publication, so they are deliberately excluded here. Gross burn and net burn are frequently mislabelled in board packs, and for a company with meaningful revenue the two lines tell opposite stories.
Category split omitted: No two independent Tier 1 or Tier 2 sources publish a distribution of absolute monthly burn split by stage or sector; the widely circulated stage figures are unsourced secondary claims.
When it looks bad
Burn steps up in a staircase, each step matching a hiring wave, while the revenue line on the same axis stays a straight diagonal, so the vertical gap between the two widens every quarter.
Net burn moves $310k to $395k to $520k across three quarters as headcount goes 22 to 31, while quarterly net new ARR sits flat at about $240k.
What to do about it
- Split the burn line into payroll and non-payroll and plot headcount underneath it. Payroll is typically 60 to 70 percent of burn at growth stage, so a burn move without a headcount move is usually a timing artefact, and a burn move with one is a plan decision that should have been forecast three months earlier.
- Put a hiring gate on the chart: no offer goes out in a month where trailing three-month net new ARR is more than 20 percent below plan. Burn added through headcount is the hardest to reverse, and Carta's data showing net headcount growth near zero across VC-backed companies since 2023 means restraint is already the peer norm rather than a signal of distress.
- Reforecast burn within 30 days of closing a round and put the step-up in the plan explicitly. SVB's data has burn rising about 50 percent in the year after a raise, so a plan that holds burn flat post-close will be wrong by the second month and will stop being used by the fourth.
- Chart burn against net new revenue on a second axis rather than against plan. Burn rising faster than plan is a budgeting question; burn rising faster than revenue is a business model question, and only the second one justifies a cut.
Sources
- SaaStr (reporting SVB) Reports that in 2025 companies accelerated after raising, with burn up about 50 percent and revenue growth up about 75 percent in the twelve months following a round, a reversal of the 2022 to 2024 pattern of extending runway. saastr.com ↗
- Silicon Valley Bank Notes that burn multiples for AI companies run higher than other sectors, suggesting low-cost capital is funding less efficient growth, with data reflecting medians since 2022. svb.com ↗
- Silicon Valley Bank Finds AI companies showing higher burn rates and lower profit margins than non-AI peers while taking 58 percent of total VC investment. svb.com ↗
- Carta Reports that net headcount growth across VC-backed companies on Carta has hugged zero since 2023, with average Series B headcount falling from 53 to 45 and Series D from a 2023 peak to 131 employees in 2025. carta.com ↗
- SaaS Capital Puts median total departmental spend at 96 percent of ARR for bootstrapped and 101 percent for equity-backed private SaaS companies, with equity-backed companies spending roughly 70 percent more on sales and 100 percent more on marketing. saas-capital.com ↗
- Benchmarkit Reports private SaaS operating expense at median levels of 37 percent of revenue for sales and marketing, 34 percent for R&D and 24 percent for G&A, which sums to well above 100 percent of revenue for the median company. benchmarkit.ai ↗
- Carta Reports total round count in 2025 at a six-year low with capital concentrating into fewer and larger rounds, which lengthens the interval a given burn rate has to survive. carta.com ↗