{
  "version": "1.3.0",
  "releasedAt": "2026-05-20",
  "kpi": {
    "rogueId": "finance.gross_burn_rate",
    "slug": "gross_burn_rate",
    "domain": "finance",
    "defaultLabel": "Gross Burn Rate",
    "description": "Average monthly cash outflow before any inflows are netted off — essentially the company's monthly cost base in cash terms. Tracked alongside net burn because net burn alone can mask a structural problem when revenue is masking high cost. The board reads gross burn to understand the absolute cost commitment (mostly payroll, infra, COGS, sales spend) regardless of revenue mix. Common pitfall: founders often optimize the net burn narrative (\"we cut burn 30%\") via a one-time inflow without addressing the gross-burn cost base — the next quarter without that inflow re-exposes the underlying spend. Always present gross and net side-by-side.",
    "fieldType": "currency",
    "unit": "/month",
    "maturity": "general",
    "suggestedForStages": [
      "preSeed",
      "seed",
      "seriesA",
      "seriesB"
    ],
    "defaultOwningFunctions": [
      "Finance"
    ],
    "stageRelevance": {
      "preSeed": "recommended",
      "seed": "recommended",
      "seriesA": "recommended",
      "seriesB": "recommended"
    },
    "definitionSource": {
      "tier": "editorial",
      "sourceName": "imboard Editorial",
      "sourceUrl": null,
      "sectionRef": null,
      "publicationDate": "2026-04-01",
      "attributionNotice": null
    },
    "formula": "gross_burn_rate = total_operational_outflow / months_in_period. Same denominator and averaging convention as net burn (3-month trailing average is standard). Always greater than or equal to net burn.",
    "whyItMatters": "Strips revenue volatility from the survival picture — shows the cost commitment the company must support each month regardless of bookings outcomes. A widening gap between gross and net burn that depends on a single deal or one-off inflow is a fragility signal.",
    "interpretationGuidance": "Compare gross-burn composition (payroll, infra, GTM, COGS) to revenue mix; sustained gross burn growing faster than ARR is a leading deterioration signal even when net burn looks flat. No single published gross-burn threshold exists — interpret relative to ARR and revenue per FTE (`hr.arr_per_fte`). Practitioner consensus (industry folk-wisdom, not citation-grade): payroll typically accounts for 65–80% of gross burn in venture-backed SaaS.",
    "relatedKpiIds": [
      "finance.net_burn_rate",
      "finance.burn_rate_actual",
      "finance.total_operational_outflow",
      "finance.runway_months",
      "hr.arr_per_fte",
      "sales.arr"
    ],
    "calculationPolicy": {
      "inclusionRules": [
        "All cash outflow from operations — payroll, benefits, infra, GTM, COGS, G&A, taxes paid, professional fees, software. No netting of inflows.",
        "Divide by months in period. Use the same trailing-3-month smoothing as net burn for direct comparability.",
        "Result is always positive (or zero in the degenerate case of a brand-new entity)."
      ],
      "exclusionRules": [
        "Financing outflows: debt repayments, equity buybacks, dividend payments. Gross burn is an operating metric.",
        "M&A outflows (acquisition consideration, transaction fees). Flag separately.",
        "Non-cash expenses: D&A, stock-based compensation, accrued-but-unpaid items.",
        "Cash inflows of any kind — gross burn is outflow-only by definition."
      ],
      "requiredInputs": [
        "Period-by-period total operational outflow.",
        "Period length and smoothing window.",
        "Optional: outflow composition breakdown (payroll / infra / GTM / G&A) for narrative."
      ],
      "dataSourcePriority": [
        "Cash-basis P&L outflow lines.",
        "Accrual P&L with non-cash items removed (D&A, SBC, accruals)."
      ],
      "edgeCases": [
        "Annual employer-tax payment cycles cause a 1–2-month outflow spike (typically Jan/Apr in the US). Smoothing window handles this if applied; if not, footnote it.",
        "Lumpy annual SaaS / infra prepayments (insurance, software renewals) spike outflow in their month. Same handling as employer-tax: smooth or footnote.",
        "Layoff severance: one-time outflow that can be 2-3x a normal month. ALWAYS flag as one-off and present a \"normalized gross burn\" alongside."
      ],
      "validationChecks": [
        "Gross burn ≥ net burn always. If gross < net, the inflow side has crossed into the outflow accidentally.",
        "Payroll typically accounts for 65–80% of gross burn in venture-backed SaaS (industry consensus). Materially outside this band invites a composition narrative.",
        "Gross burn ÷ ARR provides a cost-coverage view; sustained growth in this ratio while ARR flatlines is a leading deterioration signal."
      ],
      "commonMiscomputations": [
        "Subtracting any inflow — converts gross burn into net burn and erases the metric's purpose.",
        "Including financing outflows (debt repayment, buybacks) — makes \"operating cost base\" look higher than it is.",
        "Counting SBC or D&A as gross burn — these are accounting, not cash.",
        "Failing to flag severance / restructuring as one-off — a layoff month produces a gross-burn spike that mis-reads as a structural cost expansion."
      ]
    },
    "metricBasis": {
      "timeBasis": "period_flow",
      "moneyBasis": "cash",
      "production": "computed"
    }
  }
}