Burn Rate

Burn rate is the rate at which a startup spends money. Gross burn = total monthly expenses (salaries, rent, marketing, software, etc.). Net burn = gross burn minus monthly revenue. Net burn is the metric that actually determines runway.

Burn rate matters because it directly constrains how long you have to reach your next milestone. High burn rates in early stages are acceptable if growth is commensurate — the question is always "what are we getting for this burn?" Burn with strong growth creates company value. Burn without growth just removes options.

Burn multiple is a useful metric: net burn ÷ net new ARR added. A burn multiple of 1.5x means you're spending ₹1.5 in burn for every ₹1 of new ARR — acceptable at seed, concerning at Series B, dangerous at Series C.

Indian salary benchmarks are significantly lower than Silicon Valley equivalents, which gives Indian startups a natural burn rate advantage. A well-staffed 10-person Indian startup can operate on ₹20–40 lakh/month, where a comparable US startup would spend ₹80–150 lakh/month. This structural advantage is why Indian startups can raise smaller rounds and still achieve significant milestones.

Common Indian burn rate mistakes: premature hiring (hiring ahead of revenue), over-spending on paid acquisition before finding a repeatable channel, and taking expensive office space to look credible to investors (investors care about metrics, not offices).