Startup Runway Calculator Guide: How Long Your Cash Will Last
Startup runway is how many months of operation your current cash can fund. It's the single most important number any startup founder needs to know — and monitor weekly. Learn to calculate it precisely and extend it strategically.
Gross Burn vs. Net Burn: What Each Tells You
Burn rate has two versions that answer different questions. Knowing which version you're using — and when to use each — prevents dangerous misunderstandings about financial position. Gross Burn Rate: Total cash spent per month on all operating expenses, regardless of revenue. This is total outflow: payroll, rent, software, cloud infrastructure, mar
Calculating Runway Accurately: The Trajectory Method
Simple runway calculation (Cash ÷ Net Burn) assumes constant burn. Most startups have increasing burn — they're hiring, expanding infrastructure, and growing marketing spend. Simple division overstates runway in growth scenarios. The trajectory method: 1. Project month-by-month expenses and revenue for the next 18–24 months 2. Calculate cumulative
Default Alive vs. Default Dead: Paul Graham's Framework
Y Combinator's Paul Graham introduced the 'default alive' framework in 2015 — one of the most clarifying concepts in startup finance. The question is simple: given current revenue, revenue growth calculator rate, and expense growth rate, will the company reach profitability before running out of money without any additional funding? Default alive:
Strategies to Extend Runway
Extending runway means either increasing cash inflows, decreasing cash outflows, or both. The right combination depends on the stage of the company and what tradeoffs between growth and survival are acceptable. Expense reduction strategies: Payroll restructuring: Payroll is typically 60%–80% of startup expenses. Reducing headcount is the highest-im
Frequently Asked Questions
What is startup runway?
Startup runway is the number of months a company can continue operating at its current burn rate before running out of cash. Runway = Current Cash ÷ Monthly Net Burn. Net burn = monthly expenses minus monthly revenue. A startup with $500,000 in cash and $55,000/month net burn has
What is a good amount of startup runway?
18–24 months of runway after a funding raise is widely considered the target for venture-backed startups. This gives enough time to reach meaningful milestones before the next fundraise is needed, while accounting for the 3–6 months a Series A process typically takes. Below 6 mon
How do you calculate burn rate?
Gross burn rate = all monthly cash expenditures (payroll, rent, software, marketing, etc.). Net burn rate = gross burn minus monthly revenue. For runway calculation, use net burn. For unit economics analysis, use gross burn. Use 3-month trailing average to smooth timing variabili
What is a good burn rate for a startup?
There's no universal 'good' burn rate — it must be evaluated relative to growth and capital efficiency. Burn multiple (net burn ÷ net new ARR) is the more useful metric: under 1.0× is excellent, 1.0–1.5× is healthy, above 2.0× requires scrutiny. A $200,000/month burn on $500,000/
How much runway should I have before fundraising?
Start the fundraising process with 9–12 months of runway for a Series A. The process typically takes 3–6 months, and you want to close with at least 3–4 months of buffer. Starting at 6 months of runway means closing at 0–1 months — dangerous. Starting at 12 months gives negotiati
What happens when a startup runs out of runway?
Without additional capital or a path to profitability, the company must cease operations. In practice, founders facing imminent cash exhaustion typically pursue one or more of: emergency fundraising (often at unfavorable terms), asset sale (acqui-hire), structured wind-down to pa