Burn rate
The cash a company consumes per month: gross burn counts total outflows, net burn subtracts cash coming in.
Burn rate measures cash consumption per month, in two flavors that must never be confused in the same sentence. Gross burn is total cash out: payroll, rent, equipment, services. Net burn subtracts reliable cash in (grant instalments, tax-credit refunds when received, early revenue), and is the figure that divides into cash to give runway. A company stating “burn” without the adjective in a board document creates exactly the ambiguity diligence exists to catch.
Reading burn well means normalizing it. One-off items (an equipment purchase, a legal bill, an annual insurance premium) belong in a separate line, not in the monthly run rate; a founder who lets a cryostat purchase sit in the March burn figure shows a 2x spike that means nothing. The useful presentation is a run-rate burn with one-offs called out, trended over quarters.
The management discipline is tiering: which costs are committed (leases, notice periods), which are controllable within a quarter, which are discretionary today. That tiering is what turns a downside scenario from a spreadsheet exercise into an executable plan, and it is the first question a serious board asks when a milestone moves.
Quantum burn is structurally heavier and stickier than software burn: cryogenics, lasers, cleanroom or foundry access, and senior PhD salaries do not compress without cutting the roadmap itself. Tax-credit financing (SR&ED, CIR) reimburses with a lag, so accrued and received are different numbers and only the second one is runway. Investors read quantum burn against milestone progress, dollars per technical proof, which is the pre-revenue cousin of capital efficiency.
Gross burn is $200,000 a month. A $40,000 monthly grant instalment and $10,000 of paid pilot work bring net burn to $150,000 (200,000 - 40,000 - 10,000). The SR&ED refund accrued this year but received next year improves the annual accounts, not this quarter's runway; counting it as current cash is how runway models lie politely.
From definition to decision
Model this in your own round, scenarios, dilution and runway, in the founder workspace.