In 2025, the Australian startup scene is as vibrant as ever, but the rules of the game are changing. Founders and small business owners are facing a funding climate that’s more competitive and risk-averse, making the concept of burn rate more critical than ever before. Whether you’re pitching to VCs or bootstrapping your way to product-market fit, understanding your burn rate could mean the difference between thriving and shutting your doors.
What is Burn Rate—and Why Does It Matter?
Burn rate is a measure of how quickly your business is spending cash, typically expressed as a monthly figure. For startups, it tells you how long your current funds will last if you keep spending at the current rate. In 2025, with funding rounds taking longer to close and investors scrutinising every dollar, keeping a close eye on burn rate is non-negotiable.
- Gross burn rate: Total cash outflows per month (operating expenses, salaries, rent, etc.).
- Net burn rate: The difference between cash outflows and inflows per month (i.e., net cash loss).
Let’s say your startup spends $50,000 a month and brings in $20,000 in revenue. Your net burn rate is $30,000 per month. If you have $300,000 in the bank, your runway is 10 months—unless something changes.
2025 Trends: Funding, Policy, and Burn Rate in Focus
This year, several shifts are shaping how founders think about burn rate:
- Tougher fundraising environment: After the global tech downturn of 2023-24, Australian VCs are more cautious, with average deal sizes smaller and due diligence processes longer.
- Government support updates: The 2025 Federal Budget included new tax incentives for R&D, but phased out some COVID-era grants, pushing founders to rely less on subsidies and more on sustainable growth.
- Investor expectations: Seed and Series A investors are now demanding detailed burn rate forecasts and contingency plans before signing term sheets.
Case in point: Sydney-based healthtech startup MedTechly reduced its burn rate by 40% in early 2025 by renegotiating cloud contracts and shifting to a remote-first model, giving it an extra six months of runway and time to reach product-market fit before its next raise.
How to Calculate and Manage Your Burn Rate
Calculating burn rate is simple in theory but requires discipline in practice. Here’s how to stay on top of it in 2025:
- Track actual cash flow, not just P&L: Use real bank statements and cash movements, not accrual accounting, to avoid surprises.
- Update your forecasts monthly: Incorporate new expenses, hiring plans, and any revenue upticks or downturns. Dynamic forecasting is a must in today’s climate.
- Scenario planning: Model best- and worst-case outcomes (e.g., delayed funding, unexpected churn) to know your minimum and maximum burn rates.
- Act early: If your runway drops below 12 months, take action—cut discretionary spend, delay non-essential hires, or explore bridge financing.
Tools like Xero, MYOB, and new AI-driven platforms like Fathom and LivePlan have made it easier than ever to automate cash flow tracking and scenario planning, helping founders stay nimble.
Burn Rate Benchmarks for Australian Startups
What’s a ‘healthy’ burn rate? It depends on your sector and stage, but recent data from the Australian Investment Council suggests:
- Pre-seed/Seed stage: Net burn rates of $10,000–$50,000 per month are common, with a preferred runway of 18–24 months.
- Series A/B: Higher burn rates ($80,000–$200,000+), but investors want to see corresponding revenue growth and a clear path to breakeven.
In 2025, many founders are opting for ‘capital-efficient’ growth, focusing on sustainable unit economics rather than blitzscaling at all costs. That means prioritising customer acquisition channels with clear ROI, automating back-office tasks, and deferring major capital expenditures until metrics justify the spend.
Conclusion: Make Burn Rate Your Superpower
In a year where access to capital is tighter and scrutiny is higher, burn rate isn’t just a number—it’s your business’s heartbeat. Mastering it gives you leverage with investors, peace of mind for your team, and the agility to seize opportunities (or weather storms) as they come.
