What is burn rate, and why do investors ask about it?

You check the business account on a Friday afternoon and pause for a second. Not because something is wrong, but because you're not quite sure how long the money will last. That feeling has a name. It's called burn rate.

Burn rate is how much cash you spend each month. No more complicated than that. But it's often the first number an investor asks for, before revenue, before growth.

In short:

• Gross burn is all your costs; net burn subtracts your revenue

• Burn rate and runway together show how much time you have left

• A high burn rate isn't dangerous if your growth keeps pace with it

Two ways to calculate it

Gross burn is all costs per month. Salaries, rent, tools, everything.

Net burn is gross burn minus revenue for the same month. Net burn shows how quickly your cash is actually shrinking.

An example. You have 400,000 SEK in costs and 150,000 SEK in revenue per month. Gross burn is 400,000 SEK. Net burn is 250,000 SEK. That's how much your cash decreases each month if nothing changes.

Why investors ask straight away

Burn rate matters most alongside another number: runway. Runway shows how many months your cash will last at the current rate.

If you have 3,000,000 SEK left and a net burn of 250,000 SEK, you have 12 months of runway. That number drives a lot of the conversation:

• Are you in a hurry to close your next round? Under 6 months signals stress.

• Are you growing at the same rate you're burning? If not, investors will notice immediately.

• How much growth are you getting per krona spent?

In short, burn rate shows whether you understand your own business. Answer without having to calculate on the spot, and investors will trust you faster. Want to see what it looks like in practice? Book a short walkthrough with MinCFO.

Three common mistakes

Many founders only look at gross burn. That gives a scary number that says nothing about reality, especially if revenue is growing quickly.

Many calculate based on a single month. One large invoice or a seasonal spike can distort the picture entirely. Use an average over three to six months instead.

Many forget to update the number. Burn rate changes every month. Walk into an investor meeting with a figure that's three months old, and you lose credibility immediately.

That last one is where most smaller companies get stuck. Not because the number is hard to calculate, but because it requires ongoing attention, and that's easy to deprioritise when you're building a product and talking to customers at the same time. MinCFO's platform tracks it automatically, so the number is already there when someone asks.

Common questions

What is a good burn rate? There's no universal answer. What matters is the relationship between your burn rate and your runway, and whether the burn is actually driving growth.

Do loans count towards burn rate? No. Burn rate measures operations, not loans or other financing activities.

What's the difference between burn rate and runway? Burn rate shows how much cash disappears each month. Runway shows how many months your remaining cash will last at that pace. Burn rate is your speed; runway is how far you'll get on it.

How often should you recalculate your burn rate? Monthly at a minimum, as part of your regular reporting. If something significant happens in the business or the market, recalculate immediately, not at the next scheduled review.