Burn Rate & Runway Calculator
Calculate your startup's burn rate and cash runway. Understand how long your company can operate before needing to raise new funding.
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Understanding Burn Rate
Burn rate measures how quickly a company spends its cash reserves. It's one of the most critical metrics for startups, as it directly determines how long you can operate before running out of money.
Calculation Method
- Gross Burn Rate: Total monthly operating expenses
- Net Burn Rate: Monthly Expenses - Monthly Revenue
- Cash Runway: Cash Balance ÷ Net Burn Rate
Key Concepts
- Gross Burn: Total cash spent per month, regardless of revenue
- Net Burn: Actual cash depletion after accounting for revenue
- Runway: Number of months until cash runs out at current burn rate
- Cash Flow Positive: When revenue exceeds expenses (infinite runway)
Runway Benchmarks
- 18+ months: Healthy - focus on growth
- 12-18 months: Adequate - monitor closely
- 6-12 months: Start preparing for fundraising
- Under 6 months: Critical - fundraise immediately
Important Considerations
- Fundraising typically takes 3-6 months
- Revenue growth can extend runway significantly
- One-time expenses can temporarily increase burn
- Seasonal variations may affect monthly calculations
Frequently Asked Questions
What is burn rate?
Burn rate is the rate at which a company spends its cash reserves before generating positive cash flow. Net burn rate (expenses minus revenue) is the most important metric, as it shows actual cash depletion and determines your runway.
What is a healthy runway for startups?
Most VCs recommend maintaining at least 12-18 months of runway. This gives you time to hit milestones, raise your next round, and handle unexpected challenges. If your runway drops below 6 months, you should be actively fundraising.
How does revenue growth affect burn?
As revenue grows, your net burn rate decreases, extending your runway. Eventually, when revenue exceeds expenses, you become cash flow positive with infinite runway. This is why investors focus heavily on revenue growth rates and unit economics.
When should founders start fundraising?
Start fundraising when you have 9-12 months of runway remaining. Fundraising typically takes 3-6 months, and you want buffer for negotiations and unexpected delays. Never wait until you're desperate—investors can sense urgency and it weakens your position.