Burn Rate Calculator
Calculate your startup's monthly burn rate and cash runway with our startup runway calculator.
What this calculator does
This calculator turns a cash balance into a date. Enter the cash you hold, your monthly revenue, and your monthly expenses, and it returns net monthly burn, net cash flow, and the runway in months before the balance reaches zero.
The arithmetic is straightforward, but the reframing matters. A balance sheet showing 1.5 million pounds reads as comfortable; the same figure against a 160,000 pound monthly net burn reads as roughly nine months, which changes what the next board meeting is about. Runway is the single number that converts finance into a deadline everyone in the company can act on.
When to use it
Review it monthly, and rerun it before any commitment that moves the cost base: a hire, an office lease, a marketing spend, or a pricing change. Each of those is a runway decision even when it is presented as something else.
Its most important use is timing a raise. Subtract six months from the runway figure and you have the date fundraising must begin, which is nearly always sooner than expected. It also frames the harder decision honestly. If runway is nine months and a realistic round takes six to close, cutting costs while you still have options is a strategic choice; doing it at three months remaining is a distress signal investors will price in.
Understanding the inputs
Cash balance should be money in the bank and available. Exclude committed but undrawn investment, an R&D tax credit claim not yet received, and invoices outstanding however reliable the customer.
Monthly revenue should be cash actually collected rather than recognised revenue or contracted value, because runway is a cash question and thirty-day terms create a real gap. Monthly expenses should be total cash out including gross salaries plus employer National Insurance and pension contributions, contractors, software, rent, and any loan repayments. Use a rolling three-month average, since quarterly VAT payments and annual costs such as insurance and audit fees distort any single month.
How is this calculated?
Net Burn = Monthly Revenue − Monthly Expenses. Runway = Cash Balance / |Net Burn|.
A worked example
Take 1.5 million pounds in the bank, 90,000 pounds of monthly revenue, and 250,000 pounds of monthly expenses. Net burn is 160,000 pounds, giving a runway of about 9.4 months. On that basis a raise needs to be underway immediately.
R&D relief changes it modestly. If 1.2 million pounds of the annual 3 million pound cost base qualifies and the merged scheme returns roughly 15 percent net of tax, that is about 180,000 pounds a year, or 15,000 pounds a month in effect. Net burn falls to around 145,000 pounds and runway extends to roughly 10.3 months, close to one extra month. Useful, but the payment arrives as a single sum after the accounting period closes, so it does not smooth month-to-month cash at all.
Limitations and assumptions
This is a static model assuming revenue and expenses stay flat. In practice headcount raises costs in steps, annual contracts land unevenly, and growth compounds, so the figure understates runway for a scaling company and overstates it for one with hires already committed.
It ignores working capital timing, which is what usually causes a cash crisis in an otherwise viable business: customer payment terms, quarterly VAT liabilities where you hold collected output VAT until the return falls due, corporation tax payments, annual insurance and audit fees, and R&D credits arriving in arrears. It also excludes debt facilities, bridge funding, venture debt, and grant instalments. Use it as a headline planning figure alongside a proper thirteen-week cash flow forecast.
Common Questions
- What is the difference between gross and net burn?
- Gross burn is total monthly cash out regardless of revenue. Net burn subtracts revenue and is the rate your bank balance actually falls. Runway comes from net burn. Investors will ask about both, because gross burn describes the size of the operation while net burn describes how long it can survive.
- How much runway do UK investors expect?
- Eighteen months is the common target after a seed or Series A, since a UK round typically takes four to six months from first conversation to funds landing, and you need two or three quarters of progress to show beforehand. Below twelve months, fundraising has already become the founders' primary occupation.
- How do R&D tax credits affect runway?
- Meaningfully but unevenly. Qualifying R&D expenditure attracts relief under the merged scheme, which can return a material percentage of eligible spend. The catch for runway is timing: it arrives as a lump sum months after the accounting period ends, so it is a cash event to plan around rather than a monthly reduction in burn.
- Does employer National Insurance count in my burn?
- It must. Employer National Insurance at 15 percent on earnings above the secondary threshold for 2026/27, plus pension auto-enrolment contributions and the Apprenticeship Levy for larger payrolls, sit on top of gross salaries. Budgeting from salary figures alone understates payroll cost by well over 15 percent.
- Should VAT be included in my expense figure?
- Only the amount you cannot reclaim. A VAT-registered company reclaims input VAT on most purchases, so gross invoiced amounts overstate the true cost, but VAT is a genuine cash timing issue: you hold output VAT collected from customers until the quarterly return falls due. Keep it out of burn and track it separately in cash flow.
- What is the burn multiple and why does it matter?
- Net burn divided by net new annual recurring revenue over the same period. Under 1x is exceptional, 1.5 to 2x is respectable, and above 3x suggests growth is being bought rather than earned. It is increasingly the metric UK investors use to compare companies at different stages and growth rates.
- How does an Innovate UK grant change the picture?
- Grants are usually paid quarterly in arrears against claimed expenditure, so they reduce net burn but only after you have already spent the money. They also typically require match funding. Treat grant income as revenue in the calculation only once you are confident of the claim timetable, not from the award letter.
- When should I start raising?
- With nine to twelve months of runway left. UK rounds involve EIS or SEIS advance assurance where relevant, due diligence, and legal completion, all of which take longer than founders plan for. Investors read short runway as leverage, so a process started at four months remaining will be priced accordingly.