Burn Rate & Runway
The precise date you run out of money. Plan your next fundraise or profitability goal.
How This Tool Works
Survival is the #1 goal of early-stage startups. This calculator computes your Net Burn Rate (how much cash you lose monthly) and your Runway (how long until you hit $0). It's the dashboard for your company's life expectancy.
- Formula:
Cash Balance / (Expenses - Revenue) = Months of Runway - The Logic: If you spend more than you make, you are "burning" cash. You need to know exactly when the tank runs dry.
How to Use
- Current Cash: Total money in the bank today.
- Monthly Expenses: Payroll, server costs, rent, software subscriptions, ads.
- Monthly Revenue: MRR (Monthly Recurring Revenue).
Example Scenario
Cash in Bank: $250,000.
Expenses: $25,000/mo.
Revenue: $5,000/mo.
• Net Burn: $20,000/mo
• Runway: 12.5 Months
• Verdict: Default Alive (but need to grow).
Why This Matters
Running out of cash is the main reason startups die. Knowing your runway helps you decide when to start fundraising (usually 6 months before zero) or when to cut costs to reach "Default Alive" status.
Limitations & Disclaimer
• This assumes expenses and revenue remain constant (linear projection). In reality,
expenses often grow as you hire.
• Does not account for one-off costs like annual tax bills or equipment purchases.
FAQs
18-24 months is the standard for venture-backed startups. This gives you time to hit milestones, hire, and fundraise for the next round without panic.
Gross Burn is your total spending. Net Burn is total spending minus revenue. Investors care about Net Burn because it dictates your runway.
You can either cut costs (reduce team size, software, ads) or increase revenue. Fundraising also extends runway but dilutes equity.