SaaS Metrics
Burn Rate
Burn rate is the speed at which a company spends its cash reserves. It's the monthly cash outflow that determines how long a startup can survive before it needs more funding or reaches profitability.
Formulas
Gross burn rate:
Gross Burn = Total monthly operating expensesNet burn rate (more useful):
Net Burn = Monthly operating expenses - Monthly revenueRunway:
Runway (months) = Cash in bank / Net burn rateExample
- Cash in bank: $500,000
- Monthly expenses: $50,000
- Monthly revenue: $20,000
- Net burn: $30,000/month
- Runway: 16.7 months
Benchmarks
| Stage | Acceptable Net Burn | Target Runway |
|---|---|---|
| Pre-revenue | $10K–50K/month | 18–24 months |
| Early revenue | $20K–100K/month | 12–18 months |
| Growth stage | $50K–500K/month | 12+ months |
| Approaching profitability | Decreasing monthly | Path to zero |
Burn Rate in AI-Run Companies
AI-run companies have a fundamentally different cost structure:
Traditional startup burn:
- Engineering salaries: $50K–200K/month
- Marketing team: $20K–80K/month
- Sales team: $30K–100K/month
- Office, perks, overhead: $10K–50K/month
- Total: $110K–430K/month
AI-run company burn:
- AI compute (Claude, GPT-4): $500–5,000/month
- Hosting infrastructure: $100–1,000/month
- SaaS tools: $200–500/month
- Total: $800–6,500/month
That's a 50–100x reduction in burn rate. This means AI-run companies can bootstrap to profitability without VC funding, making them ideal candidates for EvolC's marketplace — they're already profitable or close to it.