Burn rate and runway: the questions investors should ask

A founder tells you the company has eighteen months of runway. Ask the question behind it: on what date does the bank balance reach zero? Runway is a date. A month count is an estimate that quietly assumes nothing will change, and you know something always does.

That gap matters more in 2026. Seed funding for Indian tech companies fell 37% to $698M in the first 9 months of the year, and funding rounds fell 38%, according to Tracxn data as reported by CXOToday. Fewer rounds. Longer raises. Burn isn't one of our six checks for evaluating early-stage startups on its own, but it runs through 2 of them: client agreements, because your forecast revenue has to be signed, and compliance, because unpaid dues are cash that's already spent.

Why should runway be a date, not a month count?

A month count divides today's cash by today's net burn. It assumes burn stays flat, customers pay on time and nothing's owed. You know better. A date forces the founder to show you the month-by-month plan behind it: the hires, the collections, the dues. Then you can test each line instead of trusting one division.

Cash is usually the last thing to go. CB Insights studied 431 venture-backed companies that shut down since 2023 and found 70% ran out of capital, though the report itself calls that the final cause and rarely the root one. Its sharper finding for you? The median time from a company's last fundraise to its shutdown was 22 months. That's global data. About 47% of those companies were based outside the US, and India isn't broken out. The lesson still travels: the round you write a cheque into has to last until the next one closes, with room to spare.

Which burn rate numbers should investors ask for?

We'd ask for 3 numbers for each of the last 6 months: gross burn, net burn and closing cash. Take them from your copy of the bank statements, not the MIS. The MIS shows what the founder meant to happen. Your bank statements show what did. The two should reconcile within a few lines.

Gross burn

Everything that leaves the account. Salaries, rent, vendor payments, cloud bills, Diwali bonuses, marketing spend and taxes, all of it, every month. You're watching the trend more than the level. A gross burn that jumps the month after a round closes tells you how your money will be spent too.

Net burn

Gross burn minus cash collected. Collected, not invoiced. Indian startups that sell to large companies or government buyers often wait months to get paid, so a booked invoice can sit in receivables from September to March while the balance falls. Ask for the receivables ageing. You'll learn a lot from it. Then ask which of those invoices the founder would bet April's payroll on.

The dues that don't show up

Some of it's spent before it leaves the account, and you won't see it in the MIS. Goods and Services Tax payable. TDS deducted from salaries but not yet deposited, which is due by the 7th of the next month. Contributions owed to the Employees' Provident Fund Organisation. Vendor bills the team is quietly holding. Founder salaries deferred "until the round". Each one shortens runway. Late GST and TDS deposits also carry interest, so the bill grows while it waits, and you'll be the one funding it.

What runway questions should you send before the first call?

Send these before you meet. You'll save yourself a meeting. A founder who runs the company from the bank account answers in a day, usually with an Excel sheet attached. A founder who runs it from the deck asks for a week. Both answers tell you something.

1. The date: on what date does cash reach zero if nothing changes?
2. The trend: gross burn, net burn and closing cash for each of the last 6 months, from bank statements.
3. The hires: which roles the plan adds, and in which month.
4. The revenue: how much of the forecast is signed, and how much is still pilots and pipeline.
5. The dues: GST, TDS, provident fund, vendor bills and deferred salaries owed today.
6. The next raise: when it starts.
7. The fallback: what gets cut first if the round runs late, and how many weeks that cut buys the company before the account is empty.

How does the next raise change the runway date?

The date that matters most isn't the day cash runs out. It's the day the founder has to start raising again. Work backwards from zero with your founder: the time to close a round, plus the weeks of first meetings before it, plus a buffer for the round that slips. That's the real deadline.

How long is the close? In a survey of 885 venture capitalists, mostly in the US, Paul Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev found early-stage firms took 73 days on average to close a deal, according to their full paper. Indian figures aren't published. We've written up how long a seed round takes in India and what stretches that clock here.

Ask for the date the cash runs out. Then ask for the date the next raise has to start.

A founder who starts raising with a few weeks of cash left is raising from weakness. You'll see it in the terms they accept. So will the next investor.

What do the founder's answers tell you?

Good answers come back to you as a date, a monthly sheet and bank statements that agree with it. Weak ones come back as a month count copied from the deck. The difference says less about the numbers than about how the founder runs the company, and that's what you're backing.

• Net burn that falls only because bills are held back: the runway is borrowed from vendors.
• Forecast revenue that's mostly pilots: runway depends on contracts nobody's signed.
• Burn growing faster than collections: check the unit economics behind the growth before you believe the plan.
• An MIS that won't reconcile: read our note on reading startup MIS reports, then ask why.

What should you do with these questions?

Put the 7 questions into your first email to every company you're considering. The replies will sort your week for you. Runway is only as good as the revenue behind it.

Questions

What is the difference between gross burn and net burn?

Gross burn is all the cash that leaves the company in a month: salaries, rent, vendors and taxes. Net burn is gross burn minus the cash actually collected from customers that month. Runway uses net burn, so check collections against bank receipts, not invoices raised.

How much runway should an early-stage startup have after raising?

There is no fixed rule. What matters is that the runway date leaves enough time to run the next raise before cash gets tight. In a survey of mostly US venture firms, early-stage deals took 73 days on average to close, and that clock starts only after first meetings.

Which hidden costs reduce a startup's runway in India?

Look for GST payable, TDS deducted but not yet deposited, provident fund contributions, vendor bills held back and founder salaries that were deferred. Each one is cash the company already owes. A runway figure that leaves them out is longer than the bank account allows.

Sources: CXOToday, Tracxn 9M 2026 Report: India Tech Funding Rises 7% to $10.3B Despite 38% Drop in Deal Volume, 24 Sep 2026 · CB Insights, The top reasons startups fail, 5 Mar 2026 · Gompers, Gornall, Kaplan and Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, 2016 (Journal of Financial Economics, 2020) · NBER Digest, How Venture Capitalists Make Decisions, Dec 2016

For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.