After a funding round closes, the relationship with your investor shifts. The pitch is over. Now comes the quarterly — and often monthly — accountability of the board relationship. Three numbers come up in every single conversation: burn rate, runway, and MRR. Knowing these loosely is not enough. Knowing them precisely, being able to explain the trend, and anticipating the follow-up questions — that is what builds investor confidence between rounds.
Burn Rate — what you are spending and whether it is the right amount
Burn rate is how much cash your business is spending each month, net of revenue. There are two versions your investor will want to know:
Gross burn: Total cash spent in a month — payroll, rent, cloud, marketing, everything. This tells the investor the total cost of operating the business at its current scale.
Net burn: Gross burn minus revenue collected. This is the number that actually matters — it is how much your cash balance is shrinking each month.
How to calculate:
If you spent ₹42L in June and collected ₹18L in revenue, your gross burn is ₹42L and your net burn is ₹24L.
Your investor does not just want to know your burn rate. They want to know whether it is trending up, down, or flat — and why. “Our net burn increased from ₹22L to ₹28L this month because we hired two senior engineers and opened the Bengaluru office as planned” is a good answer. “We are not sure exactly” is a conversation-stopper.
Runway — how many months until you run out of cash
Runway is the number of months your current cash balance will last at the current net burn rate.
Formula:
Runway (months) = Cash in Bank ÷ Monthly Net Burn
Example: Cash balance is ₹4.8Cr. Net burn is ₹24L/month.
Runway = 4.8Cr ÷ 24L = 20 months
Investors typically want to see 18+ months of runway. The rule of thumb: if runway drops below 12 months, start the next fundraise immediately — it takes 6–9 months on average to close a round. If runway drops below 6 months without a term sheet in hand, you are in a crisis.
Two things make runway calculations misleading if done carelessly:
- Using average burn instead of current burn. If burn has been increasing, use the most recent month’s number — not a three-month average. The bank balance runs out faster than the average suggests.
- Not accounting for committed future spends. If you signed a new office lease that kicks in next month, add that to your burn before calculating runway.
MRR — your north star for product-market fit and growth
Monthly Recurring Revenue is the predictable, recurring component of your revenue each month. For SaaS, subscription, or any recurring services business, MRR is the metric that tells investors whether the business model is working.
MRR = Sum of all active subscription or recurring contract values, annualised then divided by 12
For a services business like a virtual CFO practice, MRR = sum of all monthly retainers from active clients.
The components investors track:
- New MRR: Revenue from new customers this month
- Expansion MRR: Additional revenue from existing customers (upsells, tier upgrades)
- Churned MRR: Revenue lost from customers who cancelled
- Net New MRR: New + Expansion − Churned. This is the health metric.
How to present these numbers to your board
A simple monthly format that works for any early-stage startup board:
This month:
MRR: ₹X (up/down ₹Y vs last month, reason: ___)
Net Burn: ₹X (up/down vs last month, reason: ___)
Cash in Bank: ₹X
Runway: X months at current burn
Trend:
MRR growth rate last 3 months: X%
Burn trend last 3 months: increasing/stable/decreasing
Next 90 days:
Committed new MRR pipeline: ₹X
Key cost changes: ___
Projected runway change: ___
This takes 5 minutes to prepare if you track the numbers monthly. It signals to your investor that you run a financially disciplined business — which is a significant factor in whether they lead your next round.