Startup Runway Calculator

How the Runway Calculator works

Runway calculator: months of cash left

Runway is how long the business survives without new money. It is cash divided by net burn, and both halves of that division are more slippery than they look.

Net burn, not gross burn. Gross burn is everything going out; net burn is what goes out minus what comes in. A company spending $45,000 a month with $12,000 of revenue has a gross burn of $45,000 and a net burn of $33,000. Runway is calculated on the net figure. Both numbers are worth knowing — gross burn tells you the size of the machine, net burn tells you how fast the clock is running — but quoting gross burn as runway understates your position, sometimes badly.

Cash is not revenue, and runway is a cash calculation. Money invoiced but not collected does not pay salaries. Annual contracts collected up front inflate the bank balance relative to the revenue recognised, and a business with strong deferred revenue can look healthier on cash than it is, because it has already been paid for service it still has to deliver. Runway should be run from the actual balance, and ideally with a note of any large known outflows — a tax bill, an annual insurance premium, a hardware purchase — that a flat monthly average does not capture.

Flat burn understates the runway of a growing business. If revenue is growing 8% a month, the burn next month is smaller than this month's, and the month after smaller again. A flat division misses this entirely. The growth field here recalculates month by month, and where growth is fast enough it will report that the business reaches break-even before the cash runs out — the outcome that actually matters. Both figures are shown, because the flat number is the pessimistic case against which the growth assumption should be sanity-checked.

Twelve months is the conventional floor, eighteen the target. Raising money takes three to six months of full attention from the people who should be running the company, and it goes badly when the other side can see the deadline. Starting a raise with six months of runway means negotiating from weakness; starting with twelve to eighteen means being able to walk away. The same logic applies to a bootstrapped business considering a large hire or a long sales cycle.

The default lever is spend, because it is the one you control. Revenue growth is a forecast; spend is a decision. When runway shortens, the honest arithmetic is to model the burn that produces the runway you need, then decide whether that cost base can deliver the growth the plan assumes. A runway calculation that only ever gets a more optimistic growth number entered into it has stopped being a measurement.

Runway table by monthly spend

$250,000 in the bank and $12,000 of monthly revenue, with no growth assumed.

Months of runway on $250,000 cash and $12,000 monthly revenue

Runway formula and worked examples

The formula: net burn = monthly spend − monthly income; runway in months = cash ÷ net burn. With revenue growing at g per month, income in month n is income × (1 + g)ⁿ and the runway is counted month by month until the cash reaches zero.

First example. £400,000 in the bank, £60,000 spent and £20,000 earned each month. Net burn is £40,000, so the runway is 10 months.

Second example. the same business growing revenue 10% a month burns less each month — month 1 income is £22,000, month 5 is £32,210 — and by month 12 income passes spending with about £148,000 still in the bank, so the cash never runs out.

How many months of runway is safe? Many founders aim to raise with at least 6 months left, since a round typically takes 3–6 months to close.

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