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Burn Rate & Runway Calculator
Calculate your startup's monthly cash burn, runway duration, and funding requirements.
Runway Analysis
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Cash Depletion Timeline
| Month | Cash Burned | Revenue | Net Burn | Remaining Cash |
|---|---|---|---|---|
| Click Calculate to see timeline | ||||
Understanding Burn Rate & Runway
What is Burn Rate?
Burn rate is the rate at which a company spends its cash reserves. If you have $100,000 in the bank and spend $10,000 per month, your burn rate is $10,000/month. Burn rate is critical for startups because it determines how long they can survive without revenue or funding. It's the most important metric for startup survival.
Key Metrics Explained
- Gross Burn: Total monthly cash spent (salaries, server costs, marketing, etc.). Doesn't account for revenue
- Net Burn: Gross burn minus monthly revenue. If spending $100K and earning $20K, net burn = $80K
- Runway: How many months until cash runs out. Calculated as: Available Cash / Net Burn Rate
- Cash Buffer: Minimum cash to maintain (safety reserve). Typical 3-6 months buffer for emergencies
Runway Rules of Thumb
- Runway < 3 months: CRITICAL. Fundraise immediately or revenue must spike NOW
- Runway 3-6 months: WARNING. Start fundraising within 1 month maximum
- Runway 6-12 months: COMFORTABLE. Plan next round, don't rush fundraising
- Runway 12+ months: SAFE. Can focus on product and growth without funding pressure
How to Extend Runway
- Reduce Burn: Cut costs. Every $10K/month burn reduction = +2 months runway (with $500K cash)
- Increase Revenue: Sales offset burn. If earning $30K/month on $80K burn = $50K net burn (vs $80K)
- Raise Funding: New capital = reset runway. $1M funding at $50K burn = 20 more months
- Bootstrap Mode: Achieve break-even ($0 net burn) = infinite runway (no fundraising needed)
Real-World Startup Runway Scenarios
Example 1: Early-Stage SaaS Startup
- Raised: $500K seed funding
- Monthly Burn: $50K (small team: 2 engineers, 1 marketing, 1 founder)
- Monthly Revenue: $5K (5 customers at $1K each)
- Net Burn: $50K - $5K = $45K/month
- Runway: $500K / $45K = 11.1 months
- Action Required: Comfortable runway, focus on growth and product-market fit
Example 2: Scaling Startup (Series A)
- Raised: $2M Series A
- Monthly Burn: $150K (hiring 3x: 6 engineers, 2 sales, 1 marketing, 1 ops)
- Monthly Revenue: $50K (growing 20%/month)
- Net Burn: $150K - $50K = $100K/month
- Runway: $2M / $100K = 20 months
- Action Required: Aggressive growth mode, need to hit clear milestones for Series B
Example 3: Runway Crisis
- Current Cash: $100K
- Monthly Burn: $40K (skeleton crew)
- Monthly Revenue: $5K
- Net Burn: $40K - $5K = $35K/month
- Runway: $100K / $35K = 2.9 months (CRITICAL!)
- Action Required: Fundraise within 2 weeks maximum. Consider merger/acquisition. Or pivot to revenue-generating model
Example 4: Profitable Startup (Bootstrap)
- Monthly Burn: $30K (maintenance costs: server, tools, support)
- Monthly Revenue: $35K (consistent customers)
- Net Burn: -$5K (actually MAKING $5K/month!)
- Runway: INFINITE (cash buffer growing every month)
- Action Required: None. Can invest profits back into growth or keep as buffer
Using Runway for Fundraising Decisions
When to Raise Funding
- Ideal Timing: When runway is 6-9 months. Fundraising takes 3-6 months, so start when you have buffer
- Danger Zone: Wait until < 3 months runway and you're fundraising from position of weakness. VCs can smell desperation
- Too Early: Raise at 18+ months runway = dilute equity unnecessarily, plus you lose sense of urgency
- Too Late: Raise at < 1 month = desperate terms, might not even close before cash runs out
Calculating Funding Target
- Conservative: 12-month funding. Runway 12m gives 3 months to close next round + 9m buffer. Funding needed = 12 × Net Burn
- Balanced: 18-month funding. More runway, more breathing room for execution. Funding = 18 × Net Burn
- Aggressive: 24-month funding. Ideal if you're on growth trajectory. Funding = 24 × Net Burn
- Example: $50K net burn × 12 months = $600K Series A target
Fundraising Pitfalls
- Burn Rate Growth: Expect burn to increase when hiring. Plan for 2x burn in 12 months = adjust runway down
- Revenue Delays: If projecting $50K revenue but only hit $10K, net burn is much higher. Be conservative
- Market Downturns: Investors stop deploying capital. Have 18+ months runway in case of crisis
- Contingency: Always have Plan B (path to profitability, merger, pivot) if fundraising fails
Frequently Asked Questions
How do I calculate monthly burn?
Add all monthly expenses: salaries, rent, servers, marketing, tools, etc. = Gross Burn. Subtract revenue = Net Burn. Track via accounting software.
What's a healthy burn rate?
Depends on stage. Pre-revenue startup: $30-100K/month normal. Series A: $100-500K/month. Growth should be 3x burn to justify spending.
Can burn rate ever be zero?
Yes! When revenue = expenses. Called "profitability" or "breakeven". Many startups aim for this before Series B.
How fast does runway shrink?
With $500K cash and $50K burn, lose 1 month runway each month. With hiring, burn might double = lose 2 months runway monthly.
Should I keep cash buffer?
Yes. Always keep 3-6 months burn in reserve for emergencies, payroll delays, or opportunities. Don't spend every dollar.
What if runway becomes negative?
Impossible mathematically. But if runway < 3 months, you're in critical territory. Must fundraise or cut costs immediately.
Does runway include revenue?
Yes. Net burn accounts for revenue. If spending $100K and earning $20K, net burn = $80K (not $100K). Revenue extends runway significantly.
How to reduce burn rate?
Cut salaries (controversial), hire slower, negotiate cheaper rent/tools, defer non-critical spending, outsource vs hire. 10% burn cut = 1.2 months more runway.
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