How many monthsof cash do youhave left?
Enter what's in the bank, what comes in and what goes out each month. Add growth if your numbers are moving. You get your burn rate, your runway and whether you reach profit before the money runs out.
The cash runs out in about 12.5 months, before revenue catches up with costs. Something has to change: costs, growth or a raise.
- Runway
- 12.5 months
- Net burn this month
- $40,000
- Gross burn this month
- $60,000
- Break-even
- Not at flat numbers
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How runway is calculated
Runway is how many months your company can keep going before the cash runs out, if nothing changes.
First work out your net burn: what goes out each month minus what comes in. Then divide the cash you have by it.
Net burn = monthly costs − monthly revenue
Runway (months) = cash in the bank ÷ net burn
Worked example
- Cash in the bank: $500,000
- Money in each month: $20,000. Money out: $60,000
- Net burn: $60,000 − $20,000 = $40,000 a month
- Runway: $500,000 ÷ $40,000 = 12.5 months
Gross burn vs net burn
- Gross burn
- Everything that leaves the bank in a month. It shows how expensive the company is to run.
- Net burn
- Gross burn minus the cash that comes in. This is the number runway is built on, because it is what actually shrinks the bank balance.
Use a typical month, or the average of the last three. One month with an annual bill or a big one-off payment will make either number misleading.
What is a good cash runway?
There is no single right answer, but founders and investors use a few common rules of thumb:
- 18-24 monthsA common target right after raising money. It leaves time to grow before the next round.
- 12 monthsOften treated as the point to start preparing the next raise, because raising usually takes months, not weeks.
- Under 6 monthsLittle room left. Cutting costs, raising or reaching profit becomes the main job.
Default alive or default dead
Paul Graham's question is simple: at your current costs and growth rate, will you reach profitability before the money runs out? If yes, you are default alive. If not, you are default dead, and you need to change something or raise.
That is why this calculator lets you add growth. A flat calculation treats a company growing 10% a month the same as one that isn't growing at all.
Where a runway number goes wrong
- Using invoiced revenue instead of cash received. Runway is about cash.
- Forgetting yearly costs: insurance, annual software plans, taxes.
- Taking one unusual month as typical.
- Leaving out hires you have already agreed to make.
- Calculating it once and never again. Runway changes every month.
Questions founders ask
What is cash runway?
Cash runway is the number of months a company can keep operating before it runs out of cash, at its current rate of spending. It is calculated by dividing the cash in the bank by the monthly net burn.
How do you calculate burn rate?
Gross burn rate is everything that leaves the bank in a month. Net burn rate is gross burn minus the cash that comes in that month. For example, $60,000 out and $20,000 in is a net burn of $40,000 a month.
What is the formula for runway?
Runway in months = cash in the bank ÷ monthly net burn. With $500,000 in the bank and a net burn of $40,000 a month, runway is 12.5 months.
What is a good runway for a startup?
A common rule of thumb is 18 to 24 months after raising money, and to start preparing the next raise with about 12 months left. Under 6 months leaves little room to change course.
Should runway include revenue?
Yes. Runway is based on net burn, which subtracts the cash that comes in. Use cash actually received, not invoices that have not been paid.
What does default alive mean?
A company is default alive if, at its current costs and growth rate, it reaches profitability before its cash runs out. If it does not, it is default dead.
Is this calculator accurate?
The maths is exact for the numbers you enter, but the result is only as good as those numbers. It assumes your growth rates stay steady, so treat it as a projection, not a forecast, and recalculate it every month.
Fluxion connects read-only to your bank and works out cash, burn and runway in code from your real transactions, then tells you each morning where your company stands.
See how Fluxion works →