Why use this calculator
Burn rate is the single most important survival metric for startups and pre-profit companies. It tells you how quickly you are spending your cash reserves and, critically, how much time you have before the money runs out. Knowing your runway gives you a clear deadline for achieving profitability, closing your next funding round, or making necessary cost cuts. Investors always ask about burn rate, making this a fundamental metric for fundraising conversations.
How to use it
Enter your monthly revenue (even if zero), total monthly operating expenses, and current cash on hand. The calculator determines your net burn rate (expenses minus revenue), how many months of runway you have remaining, and the approximate date your cash will reach zero if nothing changes.
The formula
Net Burn Rate = Monthly Expenses - Monthly Revenue. Runway (months) = Cash on Hand / Net Burn Rate. Zero Cash Date = Current Date + Runway. Revenue Coverage Ratio = (Monthly Revenue / Monthly Expenses) x 100%.
Worked examples
Startup with $20K monthly revenue, $50K expenses, and $500K cash
Net burn of $30K/month, approximately 16.7 months of runway
Pre-revenue startup with $0 revenue, $75K expenses, and $1M cash
Net burn of $75K/month, approximately 13.3 months of runway
When people use it
- Determining when to start your next fundraising round
- Evaluating whether to cut costs or accelerate growth spending
- Presenting financial health to investors and board members
- Setting milestones that must be achieved before cash runs out
Tips
- Most VCs recommend starting fundraising when you have 6-9 months of runway remaining, as rounds typically take 3-6 months to close
- Track both gross burn (total expenses) and net burn (expenses minus revenue) as they tell different stories about your cost structure
- Build a buffer of at least 3 months beyond your planned runway to account for unexpected delays or expenses
Questions people ask
- What is the difference between gross and net burn rate?
- Gross burn rate is your total monthly spending regardless of revenue. Net burn rate subtracts revenue from expenses, showing your actual cash depletion per month. A company with $50K in expenses and $20K in revenue has a gross burn of $50K but a net burn of $30K.
- How much runway should a startup have?
- Most advisors recommend maintaining at least 12-18 months of runway. Less than 6 months is considered critical and usually triggers immediate cost-cutting or an emergency fundraise. Having 18+ months gives you time to iterate and grow without constant fundraising pressure.
- What if my revenue exceeds my expenses?
- Congratulations, you are cash-flow positive. Your net burn is negative, meaning you are generating more cash than you spend. In this case, your runway is effectively infinite from an operational standpoint, though you should still maintain cash reserves for unexpected challenges.