burn rate

Tim Brady explains how early-stage startups can calculate burn rate, runway, and growth rate. Burn rate tracks monthly cash outflow net of cash coming in, while runway estimates how many months remain before cash runs out; a monthly forecast helps when cash flow or expenses vary. Growth rate compares revenue with the prior period and should be expressed as a compounded rate, using a quarterly or annual period for seasonal businesses when appropriate. He also distinguishes recurring revenue, such as subscriptions, from non-recurring revenue, such as one-off purchases, and explains why accurate definitions matter when speaking with investors.

Kirsty Nathoo explains how startup founders can manage cash and avoid running out of money. She shows how to track burn, runway, revenue growth, and whether a company is on a path to profitability, and stresses reviewing those numbers regularly and honestly. She advises accounting for rising expenses, keeping founders responsible for understanding financial reports, and hiring carefully before product-market fit. Founders should plan as though they will not raise more money and start fundraising early enough to preserve their options.