What this calculator measures
Runway is the bluntest number in a startup: how many months until the bank account reads zero at the current pace. This calculator separates gross burn (total cash out) from net burn (cash out minus cash in), computes runway on the net figure, and projects the calendar month the money runs out — because “12 months” lands differently when it says July next year.
The formulas
Net burn = cash out − cash in
Runway (months) = cash in bank ÷ net burn
Use collections, not revenue, for cash in. A $60k month of bookings on 60-day payment terms is $0 of May cash. The bank balance responds to invoices paid, not deals signed — see bookings vs billings vs revenue.
Worked example
A startup holds $900,000, spends $140,000 a month and collects $65,000. Net burn = $140,000 − $65,000 = $75,000/month. Runway = $900,000 ÷ $75,000 = 12 months. If growth lifts collections by $6k a month, real runway is materially longer — but the plan, and the fundraise timing, should be built on the flat-line number.
What good looks like
Convention since the 2022 reset: hold 18–24 months of runway after a raise, and start the next raise with 12 months still in the bank — a round takes 3–6 months and terms deteriorate rapidly once investors can smell the fumes. Pair runway with the burn multiple to check the burn is buying growth efficiently: burning $75k a month is a fact, whether it is a good fact depends entirely on how much net new ARR it produces.
Common mistakes
- Computing runway on gross burn. That understates runway if you have revenue, and hides revenue risk if you do not question the cash-in line. Compute on net; know both.
- Using a stale burn. Runway built on last quarter’s burn is wrong the day you sign three offer letters. Recompute on the go-forward cost base after every hiring or pricing decision.
- Counting bookings as cash in. Only collected cash extends runway. Deferred payment terms, annual invoices not yet paid, and pipeline are all worth exactly nothing to this calculation.
- Treating “default alive” as permanent. Net burn at or below zero makes runway infinite in this tool — at current figures. One enterprise churn event can un-live you; rerun the numbers on the downside case too.
FAQ
What is the difference between gross burn and net burn?
Gross burn is total cash going out each month — payroll, rent, hosting, everything. Net burn subtracts cash coming in. Runway is computed on net burn, but gross burn matters too: it is what you would still owe if revenue stopped tomorrow.
How much runway should a startup keep?
The standard advice: raise when you have 12+ months left, because a raise takes 3–6 months and negotiating with 4 months of cash is negotiating from weakness. Post-2022 convention is to plan for 18–24 months between rounds with a buffer for the round taking longer than hoped.
Should runway use average burn or last month’s burn?
Neither blindly. Use last month’s net burn if it reflects your go-forward cost base; use a 3-month average to smooth one-offs like annual insurance or a hiring cluster. What matters is the forward-looking burn — a runway computed on last quarter’s smaller team is a comfortable lie.