How do I calculate startup runway?

Runway (months) = Cash Balance ÷ Monthly Net Burn Rate. Use actual bank balance as cash, and actual monthly cash outflows minus collections as net burn. Example: $1.8M cash, $150K monthly net burn = 12 months runway.

How much runway should a startup have?

18–24 months is the common target after a funding round. Falling below 12 months without a funded path triggers fundraising urgency. Below 6 months is crisis territory. Early-stage companies should target 18 months to allow for slower-than-expected growth.

When should a startup start fundraising?

Start fundraising conversations 6–12 months before you need the money. Seed rounds close in 2–4 months; Series A takes 3–6 months; larger rounds take even longer. Starting late forces you to accept poor terms or sell at distress valuations.

Does growing revenue automatically extend runway?

Yes, but not linearly. Growing revenue reduces net burn (revenue offsets expenses). At 15–20% monthly revenue growth with flat burn, static runway of 12 months may translate to 18+ months of actual runway as revenue catches up to expenses. Dynamic runway models this projection explicitly.

What is the difference between gross burn and net burn for runway purposes?

Always use net burn for runway calculations. Gross burn (total expenses) overstates how fast you're depleting cash if you have revenue. Net burn (expenses minus revenue collected) shows actual cash consumption. A company with $300K gross burn and $100K monthly revenue has $200K net burn — 50% more runway than gross burn suggests.

Startup Runway Calculator: How Many Months Until You Run Out of Cash

Calculate your startup's runway in months using cash and burn rate. Understand how revenue growth affects runway, when to fundraise, and the difference between static and dynamic runway.

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The Runway Formula

Runway (months) = Cash Balance ÷ Monthly Net Burn Rate

Example: $2.4M in the bank, burning $200K/month net: Runway = $2,400,000 ÷ $200,000 = 12 months

This is the static runway calculation — it assumes constant burn and zero revenue growth. For startups with growing revenue, actual runway is longer.

Static vs. Dynamic Runway

Static runway uses current net burn rate as a constant: - Runway = Cash ÷ Current Net Burn - Best for: conservative worst-case planning

Dynamic runway models revenue growth against burn: - Projects monthly ending cash considering revenue growth rate and burn - More accurate for growing businesses - Harder to calculate without modeling software

For conservative planning, use static runway. For board presentations and investor discussions, model dynamic runway with your actual growth assumptions — but show both.

The Fundraising Timeline Implication

You should start fundraising 6–12 months before you run out of money, not when you're approaching zero. Why:

Seed rounds take 2–4 months to close from first meeting
Series A rounds take 3–6 months
Series B+ rounds take 4–9 months
Due diligence, term sheet negotiation, and legal closing add time at every stage

Practical guidance: If your static runway is 18 months or less, begin fundraising conversations now. If it's 12 months, fundraising should be active. If it's 6 months, you're in survival mode.

Revenue Growth and Runway Extension

Growing revenue extends runway even without reducing burn:

Scenario	Starting Runway	Actual Runway
Static (no growth)	12 months	12 months
10% MoM revenue growth	12 months	~15 months
15% MoM revenue growth	12 months	~18 months
20% MoM revenue growth	12 months	~22 months

These estimates assume burn stays constant and that revenue growth eventually reduces net burn. The exact numbers depend on your starting ARR and gross margins.

Default Alive vs. Default Dead

Paul Graham's "Default Alive or Default Dead?" framework:

Default alive: At current growth rate and burn, the company reaches cash flow breakeven before running out of money (no funding required to survive)
Default dead: At current trajectory, the company runs out of cash before breakeven

Default alive companies have negotiating leverage in fundraising; default dead companies are forced to accept unfavorable terms or shut down.

To determine which category you're in: 1. Calculate your monthly revenue growth rate 2. Project when revenue will equal current gross burn 3. Check whether that happens before your cash runs out

Common Runway Management Mistakes

Treating static runway as a deadline. Runway shrinks if burn increases or revenue growth disappoints. Review monthly and model multiple scenarios.

Not discounting committed but unrecognized revenue. Signed annual contracts that haven't been invoiced or received as cash aren't in the bank yet — don't include them in the cash balance until collected.

Optimizing for maximum runway at the expense of growth. Cutting burn to 24 months of runway is not automatically good if growth slows proportionally. Investors care about trajectory, not just survival.

Starting fundraising too late. Every experienced founder has a story about underestimating how long a round takes to close. Start earlier than you think you need to.

Related Guides

Frequently Asked Questions

How do I calculate startup runway?: Runway (months) = Cash Balance ÷ Monthly Net Burn Rate. Use actual bank balance as cash, and actual monthly cash outflows minus collections as net burn. Example: $1.8M cash, $150K monthly net burn = 12 months runway.
How much runway should a startup have?: 18–24 months is the common target after a funding round. Falling below 12 months without a funded path triggers fundraising urgency. Below 6 months is crisis territory. Early-stage companies should target 18 months to allow for slower-than-expected growth.
When should a startup start fundraising?: Start fundraising conversations 6–12 months before you need the money. Seed rounds close in 2–4 months; Series A takes 3–6 months; larger rounds take even longer. Starting late forces you to accept poor terms or sell at distress valuations.
Does growing revenue automatically extend runway?: Yes, but not linearly. Growing revenue reduces net burn (revenue offsets expenses). At 15–20% monthly revenue growth with flat burn, static runway of 12 months may translate to 18+ months of actual runway as revenue catches up to expenses. Dynamic runway models this projection explicitly.
What is the difference between gross burn and net burn for runway purposes?: Always use net burn for runway calculations. Gross burn (total expenses) overstates how fast you're depleting cash if you have revenue. Net burn (expenses minus revenue collected) shows actual cash consumption. A company with $300K gross burn and $100K monthly revenue has $200K net burn — 50% more runway than gross burn suggests.

Last updated 7/28/2026