What is the difference between gross burn and net burn?
Gross burn is your total monthly cash spend regardless of revenue. Net burn is gross burn minus monthly revenue. Investors typically ask about net burn when assessing runway. If your revenue covers all expenses, net burn is zero and you are cash-flow positive.
What is a typical startup burn rate in Lagos/Nairobi?
Early-stage Lagos tech startups typically burn ₦2M–₦10M/month depending on team size. A 5-person early-stage team in Lagos might spend ₦3–5M/month (salaries ₦2M, office ₦300k, tech ₦500k, marketing ₦600k, other ₦300k). Nairobi equivalents are roughly 15–20% lower in local currency terms due to lower cost of living.
What costs should I cut first when burn is too high?
Priority order: (1) Non-performing marketing channels (pause immediately), (2) Unused SaaS subscriptions (audit everything), (3) Office costs — move to co-working or home if possible, (4) Contractor costs before full-time staff, (5) Last resort: salary deferrals with equity compensation. Never cut engineering resources if they are building core product.