Why use this calculator
Runway is the single number that tells a founder how long they have to prove the business works. The usual calculation divides cash by this month's net burn and assumes nothing changes, but in a real startup nothing stays still: revenue is growing, hires are planned and costs creep up.
A flat calculation can make a company that is on track to break even look as if it will die, or make a company whose costs are outrunning revenue look safe. This calculator projects revenue and expenses month by month at their own trend rates, so you see the runway you will actually have, the month revenue overtakes costs, and exactly how much extra money you need to raise to get there with a buffer.
How to use it
- Enter monthly revenue as the cash actually received from customers last month, from your bank statement or cash flow report rather than invoiced sales.
- Enter monthly expenses as every dollar paid out last month, including payroll, rent, contractors and software, but excluding loan principal repayments.
- Enter cash on hand as total bank balances today, leaving out undrawn credit lines.
- Enter monthly revenue growth as the average month-on-month change over the last three to six months.
- Enter monthly expense growth from your hiring plan, or from how much costs have risen each month recently.
What each result means
- Net Burn Rate
- Cash going out minus cash coming in each month. It is the rate at which the bank balance falls and the figure investors ask for first.
- Monthly Cut for 12 Months of Runway
- How much you would need to lower net burn each month, through cost cuts or extra revenue, for today's cash to last twelve months at a flat burn. Twelve months matters because funding rounds take months to close.
- Gross Burn Rate
- Total monthly spending ignoring revenue. It shows how fast you would burn if sales stopped and how big the cost base is to cut from.
- Runway at Today's Burn
- Months of cash left if revenue and costs stayed exactly as they are this month. Useful as a quick check, but rarely what actually happens.
- Runway With Growth Trends
- Months of cash left when revenue and expenses keep growing at the rates you entered. This is the number to plan fundraising around.
- Projected Zero-Cash Date
- The calendar month the bank balance reaches zero on current trends. Fundraising should close at least six months before this.
- Break-Even Month
- The first month revenue covers expenses on these trends. If it comes before the zero-cash date, the company is default alive.
- Extra Cash Needed to Reach Break-Even
- Total burn between now and break-even minus the cash you already have. It is the minimum raise; add a buffer of six months of burn on top.
- Revenue Coverage Ratio
- The share of this month's costs paid for by revenue. Watching it climb toward 100% is the clearest sign of progress.
The formula
Net burn = monthly expenses - monthly revenue
Gross burn = monthly expenses
Flat runway = cash on hand / net burn
For the trend projection, revenue in month
m = revenue x (1 + revenue growth)^(m - 1)
Expenses in month
m = expenses x (1 + expense growth)^(m - 1)
Cash at the end of each month = previous cash - (expenses in month m - revenue in month m)
Runway with trends is the point where cash crosses zero, interpolated within the month. Break-even month is the first month revenue covers expenses.
Extra cash needed = total net burn up to break-even minus cash on hand
The projection runs for up to 120 months.
How this number is used in practice
Most investors and experienced founders work on the rule that fundraising should start with nine to twelve months of runway left, because a round typically takes three to six months to close and often slips. Starting with less than six months leaves you negotiating from weakness.
The trend projection matters because the flat figure is almost always wrong in one direction or the other: a business adding revenue faster than cost has more time than the flat number suggests, while one hiring ahead of revenue has much less.
The idea of default alive, popularised in startup circles, asks one question: on current trends, does revenue overtake costs before cash runs out? If the break-even month comes before the zero-cash date, the company survives without new money; if not, survival depends on raising. A useful discipline is to review this every month with actual figures, recalculating the growth rates from the last three to six months, and to cut or delay planned costs as soon as the two dates start moving apart.
Worked examples
$20,000 revenue growing 5% a month, $50,000 expenses growing 1% a month, and $500,000 in the bank
Net burn of $30,000 a month, 16.7 months flat runway, and break-even in month 25 before the cash runs out
A pre-revenue startup spending $75,000 a month with $1,000,000 in cash and costs flat
Net burn of $75,000 a month and 13.3 months of runway, with no break-even in sight
$40,000 revenue flat, $60,000 costs rising 3% a month as the team grows, and $400,000 cash
Net burn of $20,000 today and 20.0 months flat runway, but only 12.6 months with the cost trend
When people use it
- Deciding when to start raising the next funding round
- Showing a board the runway impact of a hiring plan
- Testing whether cost cuts get the company to break-even without new money
- Sizing a raise as the burn to break-even plus a safety buffer
- Monthly founder check on whether the company is default alive
Tips
- Start fundraising with nine to twelve months of runway left. Rounds take longer than planned.
- Recalculate growth rates every month from the last three to six months of actual figures, not from the plan.
- Keep a list of costs you could cut within 30 days so you can extend runway quickly if a raise slips.
- Use cash received, not invoiced revenue. Late-paying customers shorten runway.
- Model the hiring plan explicitly: each hire adds salary plus about 25% in on-costs to the monthly burn.
- Raise enough to reach break-even or a clear milestone plus six months, not just the next twelve months of burn.
What it assumes, and where it stops being accurate
- Revenue and expenses grow at constant monthly rates. Real businesses are lumpier, with annual contracts, seasonal sales and one-off costs.
- Revenue means cash received, not invoiced. A business with slow-paying customers has less runway than invoiced sales suggest.
- Excludes new funding, loan drawdowns and debt repayments, which should be modelled separately.
- The projection stops at 120 months; beyond that the date is shown as more than ten years away.
- The zero-cash date rounds to the calendar month and moves each time you open the page.
Terms used on this page
- Net burn
- Monthly cash expenses minus monthly cash revenue: how fast the bank balance falls.
- Gross burn
- Total monthly cash expenses, ignoring any revenue.
- Runway
- The number of months until cash runs out at the projected burn.
- Default alive
- Reaching break-even on current trends before the cash runs out, without new funding.
Questions people ask
- What is the difference between gross and net burn?
- Gross burn is total monthly spending. Net burn subtracts cash revenue and is the actual rate your bank balance falls. A company spending $50,000 with $20,000 of revenue has a gross burn of $50,000 and a net burn of $30,000. Investors look at both.
- How much runway should a startup have?
- Aim to keep at least 12 to 18 months after a raise. Start fundraising at nine to twelve months, because rounds take three to six months to close. Under six months is an emergency that usually forces cost cuts or a bridge round on poor terms.
- Why is the runway with trends different from the flat runway?
- The flat figure assumes this month repeats forever. If revenue grows faster than costs, each month burns less than the last and cash lasts longer. If costs grow faster, as when hiring ahead of revenue, each month burns more and runway is shorter than the flat figure suggests.
- What does default alive mean?
- A startup is default alive if, on its current revenue and cost trends, it reaches break-even before its cash runs out. It survives without raising again. A default dead company needs new funding or cost cuts to survive, which is worth knowing early rather than a few months before the money runs out.
- What if revenue already exceeds expenses?
- Then there is no net burn and the business is cash-flow positive, so runway is not limited by operating losses. Keep a cash reserve of at least three to six months of expenses anyway, because revenue can drop suddenly and large bills such as tax often arrive at once.
Use this with
Startup Burn Rate Calculator answers one part of the question. These pick up where it stops: Cash Flow Forecast Calculator, Break-Even Calculator, Customer Churn Rate Calculator and SaaS Gross Margin Calculator.
Where these figures come from
This calculation is jurisdiction-neutral arithmetic. No country-specific rules are applied.
- U.S. Small Business Administration: Manage your finances. Cash flow management and forecasting
- business.gov.au: Finance. Australian government guidance on cash flow forecasting
- GOV.UK: Business finance support. UK funding options when runway is short
Startup Burn Rate Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.