Gross Burn

Total spend, before revenue

Gross burn is the total cash a company spends each month, ignoring revenue, which makes it the measure of the spending level itself. Where net burn nets revenue against spending, gross burn is just the outflow: every dollar leaving the business, from payroll to marketing to rent. It answers a different question than net burn, not how fast is the cash balance falling, but how much are we spending to operate, regardless of what comes in.

Gross versus net burn

The two together tell the full story:

- Gross burn: total cash spent. The spending level. - Net burn: cash spent minus cash collected. The actual loss.

A company spending 500,000 and collecting 300,000 has a 500,000 gross burn and a 200,000 net burn. The gap between them is the revenue currently cushioning the spend, which is exactly what makes gross burn worth watching on its own.

Why the spending level matters

Gross burn reveals exposure that net burn hides. A company with a low net burn but a high gross burn is heavily reliant on its revenue holding: if that revenue dips, the net burn spikes toward the gross figure, and runway shrinks fast. So gross burn is a measure of fragility as well as spending. A business whose gross burn is far above its revenue is one bad quarter away from a much worse cash position, while one whose gross burn is close to its net burn has little revenue cushioning it either way. Read alongside net burn and the burn multiple, gross burn shows the fixed spending base that cash flow forecasting must plan around, and it is why prudent operators watch not merely how fast cash is falling but how much they are committed to spending if revenue softens.