Runway & Burn Rate Calculator
Runway is the number of months your cash will last at the current burn rate. It is the single most important number for a pre-profit company.
Burn rate, properly defined
Gross burn is total monthly cash spend, regardless of revenue. Net burn is the cash deficit — what runway should be calculated from. Investors typically want to see both, because gross burn shows the cost structure and net burn shows the funding need.
What counts as cash
Cash on hand means money you can actually spend in the next 30 days: bank balances plus undrawn credit you'd realistically use. Exclude restricted cash, deposits, and accounts receivable older than your normal collection cycle. If you're counting on a Series B, don't count it until the wire arrives.
Cash burn vs. accrual loss
Net burn and net loss differ. A SaaS business that collects an annual contract upfront recognizes revenue monthly but receives the cash on day one — so its accrual P&L shows steady losses while its cash burn temporarily inverts. Conversely, a business with long receivables can be profitable on paper while burning real cash. Always compute runway from the cash flow statement, never from the income statement.
Worked example
A startup has $1.8M in cash, monthly revenue of $90K growing 8% per month, and monthly costs of $260K. Static net burn: $170K/month, giving 10.6 months of runway. With growth modeled, the burn shrinks each month as revenue compounds, extending runway to roughly 13 months — but only if growth holds. Most boards plan against the static figure to keep slack against missed growth.
The runway threshold rule
Common practice: start fundraising when runway hits 9-12 months and aggressively cut costs when runway hits 4-6 months. Running below 3 months is operationally untenable because vendors, candidates, and acquirers all sense it. The discipline isn't about the metric itself; it's about acting before you have to.
What this doesn't account for
- Lumpy spend. Annual SaaS renewals, payroll tax true-ups, and quarterly bonuses make some months heavier than the average. Map known lumps before trusting an average burn.
- Receivables risk. If a major customer pays late or churns, modeled cash inflows disappear.
- Forced conversions. SAFEs and convertible notes maturing during the runway period can change the cash situation overnight.