38% of Indian startups fail from cash flow mismanagement. Not from bad products. Not from bad markets. From not knowing three numbers.
Here's everything you need to know, explained without jargon.
Burn rate is how much money you spend every month. Simple. But most founders confuse gross burn with net burn.
Example: If you spend ₹30L/month and earn ₹12L/month in MRR, your net burn is ₹18L/month. That's the number that matters.
Most Indian founders only track gross burn. This leads them to think they have more runway than they do.
Runway is how many months until you run out of money. The formula is simple:
Runway = Cash in Bank ÷ Net Monthly Burn
If you have ₹1.8Cr in the bank and your net burn is ₹18L/month, you have exactly 10 months of runway.
The key insight: start fundraising when you have 6+ months of runway left. Most founders wait until they have 3 months left. By then it's too late — a Series A process takes 3-6 months minimum.
Cash flow is different from revenue. You can have ₹50L in invoices outstanding and still run out of cash if customers haven't paid yet.
For Indian B2B startups specifically, payment terms are brutal. Enterprise customers often pay net-60 or net-90. If your burn is ₹15L/month and you're waiting 90 days for a ₹45L invoice to clear — you could run out of cash even with strong revenue.
When a VC asks "what's your runway?" they're actually asking: "how much time do you have to prove your business model before you need more money?"
The answer they want to hear is 18-24 months. Anything less and you're fundraising out of desperation, not strength.
Compyte tracks your runway, burn rate, and cash flow automatically — updated every time you add data.