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    Burn Rate and Runway

    Monthly net cash consumption (burn) and months of cash remaining (runway).

    Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 5, 2026

    Definition

    Burn rate is the net monthly cash outflow; runway is cash on hand divided by burn rate, indicating how long a company can operate without additional financing or revenue. Boards track both numbers monthly and usually expect a financing to start when 9 to 12 months of runway remain, because MedTech rounds can take six months or more to close. Runway should be modeled against regulatory and clinical timelines, not just calendar months. Common levers to extend it include cutting nonessential spend, staging programs and adding non-dilutive funding.
    What the regulation says
    While "burn rate" and "runway" are not explicitly defined in MedTech regulations like the EU MDR or FDA 21 CFR, financial stability, directly impacted by these metrics, is an implicit expectation for manufacturers to ensure sustained compliance and product availability. Adequate funding is crucial for maintaining quality systems (e.g., as per 21 CFR Part 820, ISO 13485) and for executing post-market surveillance activities, clinical follow-up, and timely recall procedures. Regulatory bodies expect manufacturers to have the resources to meet ongoing regulatory obligations for the entire lifecycle of their devices.

    What this means in practice

    MedTech runway planning typically targets 18–24 months to reach the next value-inflection milestone (clearance, clinical readout, reimbursement decision) before re-financing.

    Examples

    • A startup MedTech company calculates its burn rate to determine if it has sufficient funds to complete a pivotal clinical trial required for FDA premarket approval (PMA).
    • A small MedTech firm uses its runway calculation to plan for the resources needed to implement changes to its quality management system mandated by ISO 13485:2016.
    • Before an audit, a MedTech company reviews its financial projections to confirm it can support the ongoing post-market surveillance activities required by the EU MDR Article 83.
    Common pitfalls
    • •Underestimating the financial resources required to achieve regulatory milestones, such as obtaining FDA clearance or CE Mark, can lead to project delays or failure.
    • •Failing to allocate sufficient budget for ongoing quality system maintenance, post-market surveillance, and potential regulatory audits can result in non-compliance.
    • •Ignoring the financial impact of unexpected regulatory inquiries, Notified Body audits, or product recalls can deplete a company's runway prematurely.
    • •Assuming that initial regulatory approvals guarantee continuous market access without considering the costs of maintaining compliance in a dynamic regulatory landscape is a common oversight.
    • •Lack of financial planning can jeopardize a company's ability to implement corrective and preventive actions (CAPAs) effectively, impacting patient safety and regulatory standing.

    Frequently asked questions

    A high burn rate without corresponding revenue or financing can deplete a company's funds, making it difficult to maintain robust quality systems, conduct necessary post-market activities, and address regulatory requirements effectively. Insufficient funds can lead to shortcuts that compromise compliance.

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    Sources

    5 sources

    Sources support the definition or relevant regulatory context, not necessarily every claim on this page. Each is graded against our source-tier hierarchy so you can see what rests on binding law versus commentary.

    Tier 2Regulator guidance and consensus· 2Tier 4Trade press and expert commentary· 3
    Link health: 5 verified· last checked 2026-06-20· added official documents checked 2026-11-01
    SVB·1PitchBook·1NVCA·1SEC·2
    1. 1
      Silicon Valley Bank Healthcare Reports
      Tier 4 Verified
      SVBsvb.com
    2. 2
      PitchBook - MedTech Coverage
      Tier 4 Verified
      PitchBookpitchbook.com
    3. 3
      NVCA Model Documents
      Tier 4 Verified
      NVCAnvca.org
    4. 4
      SEC capital-raising glossary: burn rate
      Tier 2 Verified
      SECsec.gov
    5. 5
      SEC Ready to Raise CAPITAL: calculating runway
      Tier 2 Verified
      SECsec.gov

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