After a funding round closes, the relationship with your investor shifts. The pitch is over. Now comes the quarterly \u2014 and often monthly \u2014 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 \u2014 that is what builds investor confidence between rounds.<\/p>\n
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:<\/p>\n
Gross burn:<\/strong> Total cash spent in a month \u2014 payroll, rent, cloud, marketing, everything. This tells the investor the total cost of operating the business at its current scale.<\/p>\n Net burn:<\/strong> Gross burn minus revenue collected. This is the number that actually matters \u2014 it is how much your cash balance is shrinking each month.<\/p>\n How to calculate:<\/strong> Your investor does not just want to know your burn rate. They want to know whether it is trending up, down, or flat \u2014 and why. “Our net burn increased from \u20b922L to \u20b928L 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.<\/p><\/blockquote>\n Runway is the number of months your current cash balance will last at the current net burn rate.<\/p>\n Formula:<\/strong> Example:<\/strong> Cash balance is \u20b94.8Cr. Net burn is \u20b924L\/month. Investors typically want to see 18+ months of runway. The rule of thumb: if runway drops below 12 months, start the next fundraise immediately \u2014 it takes 6\u20139 months on average to close a round. If runway drops below 6 months without a term sheet in hand, you are in a crisis.<\/p>\n Two things make runway calculations misleading if done carelessly:<\/p>\n 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.<\/p>\n MRR = Sum of all active subscription or recurring contract values, annualised then divided by 12<\/strong><\/p>\n For a services business like a virtual CFO practice, MRR = sum of all monthly retainers from active clients.<\/p>\n The components investors track:<\/p>\n A simple monthly format that works for any early-stage startup board:<\/p>\n This month:<\/strong> Trend:<\/strong> Next 90 days:<\/strong> This takes 5 minutes to prepare if you track the numbers monthly. It signals to your investor that you run a financially disciplined business \u2014 which is a significant factor in whether they lead your next round.<\/p>\n
\nIf you spent \u20b942L in June and collected \u20b918L in revenue, your gross burn is \u20b942L and your net burn is \u20b924L.<\/p>\nRunway \u2014 how many months until you run out of cash<\/h2>\n
\nRunway (months) = Cash in Bank \u00f7 Monthly Net Burn<\/p>\n
\nRunway = 4.8Cr \u00f7 24L = 20 months<\/strong><\/p>\n\n
MRR \u2014 your north star for product-market fit and growth<\/h2>\n
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How to present these numbers to your board<\/h2>\n
\nMRR: \u20b9X (up\/down \u20b9Y vs last month, reason: ___)
\nNet Burn: \u20b9X (up\/down vs last month, reason: ___)
\nCash in Bank: \u20b9X
\nRunway: X months at current burn<\/p>\n
\nMRR growth rate last 3 months: X%
\nBurn trend last 3 months: increasing\/stable\/decreasing<\/p>\n
\nCommitted new MRR pipeline: \u20b9X
\nKey cost changes: ___
\nProjected runway change: ___<\/p>\n