Startup Runway & Burn Rate Calculator
Calculate net cash burn, months of runway remaining before insolvency, zero cash date, and fundraising milestones.
Treasury & Burn Financials
๐ผ Founder Fundraising Rule
Startups should initiate fundraising conversations when they still have at least 6 to 9 months of runway remaining. Raising with under 3 months of cash destroys founder leverage and often forces onerous liquidation preferences or down rounds.
Startup Runway & Net Burn Formula
Monthly Net Burn = Monthly Gross Expenses โ Monthly Recurring Revenue (MRR); Cash Runway (Months) = Cash Balance / Monthly Net Burn- Available Treasury Cash: Total liquid bank deposits and money market funds accessible for payroll.
- Gross Monthly Burn: Total monthly operational cash outflow including payroll, cloud hosting, SaaS, and marketing.
- Monthly Revenue (MRR): Inflowing subscription revenue and contracted cash receipts.
- Net Burn Rate: The actual net cash depleted from bank reserves each month.
- Fundraising Buffer: Recommended 6-month buffer window before zero cash to avoid negotiating under duress.
Step-by-Step Worked Example
Calculation Steps:
- Initial Monthly Net Burn = $45,000 โ $10,000 = $35,000.00 / month
- Static Runway = $500,000 / $35,000 = 14.3 Months
- Compounding Revenue Growth Simulation extends dynamic runway to 15.8 Months
- Zero Cash Horizon Date: ~15 months from current date
- Target Next Fundraise Start Date: Month 9 (leaving a 6-month runway safety cushion)
How to Use This Calculator
- 1Enter current liquid cash reserves in bank accounts with your active currency.
- 2Break down monthly gross expenses (payroll, software/cloud infrastructure, and overhead).
- 3Enter current monthly recurring revenue (MRR) and expected month-over-month growth percentage.
- 4Review the Runway Health badge (Healthy 12-18 mo, Warning 6-12 mo, Critical <6 mo, or Default Alive).
- 5Check the recommended fundraising kick-off date to prepare your investor deck in advance.
Assumptions & Limitations
- Assumes steady-state expense growth unless manually adjusted with monthly inflation modifiers.
- Net burn calculations assume timely customer collections without major accounts receivable bad debt.
- Does not account for non-dilutive grant funding or venture debt venture facilities until wired.
Frequently Asked Questions
How many months of runway should a startup ideally have?
Early-stage startups typically target 18 to 24 months of runway following a funding round. Having fewer than 6 months is considered the danger zone, as fundraising processes often take 3 to 6 months to close.
What is the difference between Gross Burn and Net Burn?
Gross burn is the total cash going out the door every month regardless of income. Net burn is the difference between cash going out and cash coming in (Gross Burn minus Revenue).
What does "Default Alive" mean in venture capital?
Coined by Y Combinator founder Paul Graham, "Default Alive" means that if the startup continues growing revenue at its current pace without raising any more investor capital, it will reach profitability before running out of money.
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