Burn Rate Calculator
Calculate your startup's monthly burn rate and cash runway with our startup runway calculator.
What this calculator does
This calculator works out how long a company can operate before it runs out of money. Enter your current cash balance, monthly revenue, and monthly expenses, and it returns your net monthly burn rate, your net cash flow, and the runway in months that the combination produces.
The arithmetic is deliberately simple: net burn is expenses minus revenue, and runway is cash divided by net burn. What makes the output useful is that it converts a bank balance into a date. A company with $2 million in the bank sounds comfortable; the same company burning $280,000 a month has until roughly next summer, which is a materially different conversation.
When to use it
Run it monthly as part of a board or founder review, and rerun it before any decision that changes the cost base: a hire, an office lease, a marketing commitment, or a pricing change. Every one of those is a runway decision expressed in different units.
It is most valuable in setting a fundraising timeline. Working backwards from the runway figure by six months tells you when you must be in the market, and that date is usually earlier than founders expect. It also frames the cut decision honestly: if the calculator says nine months and the round needs twelve to close, the answer is not to hope, it is to reduce burn now while you still have the choice.
Understanding the inputs
Cash balance should be money actually in the bank and available for operations. Exclude signed but unclosed funding, restricted deposits, and accounts receivable, however confident you are about them.
Monthly revenue should be cash collected rather than bookings or recognised revenue, since runway is a cash question and a customer on annual invoicing pays very differently from one on monthly. Monthly expenses should be total cash out including payroll with employer taxes and benefits, contractors, software, rent, and any loan repayments. Use a trailing three-month average rather than last month, because one-off payments such as annual insurance or tax distort a single month badly.
How is this calculated?
Net Burn = Monthly Revenue − Monthly Expenses. Runway = Cash Balance / |Net Burn|.
A worked example
Take $2.4 million in the bank, $180,000 of monthly revenue, and $460,000 of monthly expenses. Net burn is $280,000 a month, so runway is about 8.6 months. That is already inside the window where fundraising should be the founders' main activity, not a plan for next quarter.
To reach 18 months on the same cash, net burn has to fall to about $133,000. That means either cutting roughly $147,000 a month, about 32 percent of the cost base, or growing revenue to around $327,000 a month, an 82 percent increase. Seeing both numbers side by side is what makes the choice concrete. If revenue is genuinely compounding at 8 percent a month, actual runway is longer than 8.6 months, but planning on the flat figure is the safer discipline.
Limitations and assumptions
This is a static model. It assumes revenue and expenses hold constant, which they never do: headcount plans raise costs in steps, annual contracts arrive unevenly, and growth compounds. It therefore understates runway for a fast-growing company and overstates it for one with a hiring plan already committed.
It does not model working capital timing, which is what actually kills companies with paper-profitable businesses. Payment terms, seasonality, one-off annual costs such as insurance and audit, deferred revenue, and equipment purchases all move cash without changing the monthly averages you entered. Nor does it account for the possibility of debt, a bridge round, or revenue-based financing. Treat the output as a planning number that should sit alongside a proper thirteen-week cash flow forecast.
Common Questions
- What is the difference between gross and net burn?
- Gross burn is total monthly operating spend, ignoring revenue. Net burn is spend minus revenue, the amount your bank balance actually falls each month. Runway is calculated from net burn. Investors ask about both: gross burn shows the size of the cost base, net burn shows how fast you are approaching zero.
- How much runway should I have?
- The conventional target after a round is 18 to 24 months, because raising the next one takes three to six months of full-time founder attention and you need traction to show before you start. Runway under 12 months means fundraising is already your primary job, whether you have accepted that or not.
- What is the burn multiple?
- Net burn divided by net new ARR added in the same period, popularised by David Sacks as a capital efficiency measure. Under 1x is exceptional, 1 to 1.5x strong, 1.5 to 2x acceptable, and above 3x usually signals a business buying growth rather than earning it. It travels better across stages than growth rate alone.
- Does runway account for revenue growth?
- Not in a static calculation. If revenue is compounding, net burn shrinks each month and your real runway is longer than the figure shown, sometimes considerably. If costs are rising with headcount, the reverse applies. Model both a flat case and a growth case, and plan against the flat one.
- What does default alive mean?
- Paul Graham's term for a company that would reach profitability on its current growth trajectory before the money runs out, using no further funding. Default dead is the opposite. It is a more useful question than runway alone because it asks whether the business works, not just how long you can keep paying for it.
- What is usually the largest component of burn?
- Payroll, typically 60 to 75 percent for a software company once salaries, employer FICA, benefits, and payroll taxes are counted. That is why cost reduction discussions inevitably become headcount discussions, and why hiring plans are the single most consequential lever on runway available to a founder.
- When should I start raising the next round?
- With at least 9 to 12 months of runway remaining. A process typically runs three to six months from first meeting to money in the bank, and negotiating leverage collapses the moment investors can see you are running out. Raising from a position of not needing to is how you get the terms you want.
- Does a cash balance include committed but unreceived funding?
- It should not. Use cash actually in the bank. A signed term sheet is not money, a SAFE that has not closed is not money, and a receivable from a customer who pays in 90 days is not cash today. Runway calculated on optimistic cash is the most common way founders miss a payroll.