Burn, runway and the metrics investors ask about first

If you're raising, or reporting to a board, three numbers get asked about before anything else: burn, runway, and the trend underneath them. Get the definition slightly wrong and an investor will notice immediately, because they've seen the same three numbers calculated a hundred different ways — most of them flattering, and most of them wrong.

Gross burn versus net burn

Gross burn is simply what you spent in the month. Net burn is what you spent minus what you brought in — and it's net burn that actually determines how fast your cash is depleting. A business with rising revenue can have falling net burn even while gross spending goes up, and that distinction is exactly what a sophisticated investor is checking for.

Runway is a forecast, not a snapshot

The common mistake is calculating runway as cash in the bank divided by last month's burn, and presenting that single number as though it were fixed. Runway only means something as a forward-looking forecast — if burn is trending up or down, the flat calculation is already wrong by the time you present it.

• Use a 3-month rolling average of net burn, not a single month, to smooth out one-off spikes
• Re-forecast monthly, not quarterly — runway changes faster than most founders update it
• Show the trend line, not just the current figure; a board wants to see where burn is heading, not only where it sits today

What a credible board update actually contains

The founders who get the easiest board meetings aren't the ones with the best numbers — they're the ones whose numbers never have to be re-explained or corrected mid-meeting. That comes from presenting the same four or five metrics, calculated the same way, every single month.

• Net burn for the month and the trailing three-month average
• Runway at current burn, and runway at a reasonably conservative higher-burn scenario
• Cash in the bank, as of the date of the update — not the date the deck was started
• Any one-time items that distorted the month, called out explicitly rather than left for someone to notice

None of this requires elaborate modelling — it requires the same monthly discipline a good close already gives you, applied consistently enough that your board update is a formality rather than a fire drill.