Burn Rate & Runway Calculator
Compute startup burn rate, runway in months, cash-out date, and runway-extension from cutting burn. Default-alive detector built in.
Burn Rate & Runway Calculator
Enter cash on hand, monthly gross burn (total outflow), and any monthly revenue. The tool computes net burn, runway in months, projected cash-out date, and how much extra runway a cost-cutting scenario buys you. Default-Alive detector flags when revenue covers burn.
How to Use the Burn & Runway Calculator
Add up cash across every operating account
Bank balance from your primary checking, savings, money-market, and any reserves at SVB / Mercury / Brex / Chase. Exclude credit lines (not yet drawn) and exclude AR (not yet collected). Cash means cash.
Total your monthly gross burn
Sum every recurring monthly outflow: payroll (salaries + benefits + taxes), rent and utilities, software subscriptions, hosting (AWS, GCP), marketing spend, agency / contractor fees, banking + accounting fees, insurance. Annual contracts should be normalised to 1/12 per month.
Enter actual monthly revenue (cash collected)
Cash collected this month, not MRR. If you sold an annual contract for USD 24,000 this month and received the cash upfront, all USD 24,000 counts as revenue this month for burn-calculation purposes — even though accounting recognises it as USD 2,000 over 12 months.
Run a cost-cut scenario
Try 25% as a "soft cut" (eliminate paid marketing, freeze hiring). Try 40-50% as a "deep cut" (lay off 30%, kill non-essential vendors). The scenario shows you exactly how many months a cut buys you — useful for both fundraise planning and crisis decision-making.
Burn Rate and Runway — The Single Most Important Number in a Startup
Gross Burn vs Net Burn — Two Numbers, Both Matter
Gross burn is the total monthly cash outflow — every dollar leaving the company's bank account in a typical month. Net burn is gross burn minus monthly revenue. For pre-revenue startups, gross burn equals net burn; for revenue-generating startups, net burn is the number that consumes runway. Y Combinator's CFO playbook is explicit: the only burn number that matters for runway calculation is net burn, because revenue offsets cost on a dollar-for-dollar basis when computing how long the cash lasts. Carta's State of Private Markets reports both numbers — gross burn for headcount benchmarking, net burn for capital efficiency.
The "Default Alive" framing — Paul Graham's 2015 essay that has since shaped a generation of YC-trained founders — applies when monthly revenue exceeds monthly gross burn. A Default Alive startup doesn't need to raise more capital to survive; growth becomes a strategic choice rather than a financial necessity. Most pre-Series-A startups are Default Dead — they need to raise additional capital before the current round runs out, or they cease to exist. This tool's "Default Alive" verdict triggers when monthly revenue ≥ monthly gross burn.
The 18-24 Month Runway Rule (And Why It's Still Right in 2026)
Venture investors expect startups to maintain 18-24 months of runway between rounds. The reasoning is simple: a Series A or Series B round typically takes 4-9 months from kickoff to wire (Carta's 2024 data shows median time from term sheet to close is 6 months for Series A, longer for B). Plus the founder needs 3-6 months of pre-fundraise prep time. Plus a 3-6 month buffer in case the round takes longer than expected. That's 12-18 months of forward visibility you need at any moment, plus a meaningful buffer for execution.
Translated to operational reality: fundraise when you have 12-18 months of runway left, not 6 months. Founders who wait until 6 months left of runway negotiate from weakness — investors smell desperation and the terms compress accordingly. Founders fundraising with 18+ months of runway can walk away from bad term sheets, run a competitive process, and close at top-of-market valuation. The phrase venture investors use is "fundraise from strength" — meaning when you don't strictly need the money. This calculator's verdict logic flags the 18-month threshold explicitly because that's the line at which fundraise conversations should start.
"Fundraise when you have 12-18 months of runway, not 6. Founders who fundraise from a position of strength negotiate from a different chair than founders fundraising to survive."
When to Cut Burn — The Real Cost of "Soft" vs "Deep" Cuts
A 20-25% burn cut is what most startup CFOs call a "soft cut" — eliminate paid marketing, freeze open headcount, renegotiate the most expensive vendor contracts. Soft cuts are nearly always available; they're the right move when runway drops to 12 months. A 40-50% burn cut is a "deep cut" — typically 20-30% headcount reduction, plus closing offices, plus cutting non-essential software. Deep cuts are emotionally painful but mathematically powerful: a 50% burn cut typically doubles remaining runway, buying time to pivot or close a bridge round.
The cost-cutting scenario in this tool is a sensitivity test. Run 25% to see what soft cuts buy. Run 40% to see what a moderate restructure buys. Run 50% to see what a full reset buys. The numbers usually surprise founders — runway is much more sensitive to burn cuts than to revenue increases at the margin, because revenue grows linearly while cost cuts apply immediately. A 25% burn cut on a 12-month runway typically buys 4-6 additional months; growing revenue 25% on the same starting position would buy only 1-2 months because the revenue takes time to compound.
10 Facts About Startup Burn & Runway
"Default Alive" (Paul Graham, 2015) means monthly revenue covers monthly gross burn — no fundraising required for survival.
Venture canon expects 18-24 months of runway between rounds — to give space for the next fundraise.
Carta's 2024 State of Private Markets shows median time from term sheet to Series A close is 6 months.
Net burn (gross burn minus revenue) is the number that consumes runway. Pre-revenue startups: net burn = gross burn.
Y Combinator's standard founder advice: start fundraising at 12 months left, never wait until 6 months.
A 25% burn cut on a startup with 12 months runway typically buys 4-6 additional months.
The Bessemer Burn Multiple = net burn ÷ net new ARR — measures capital efficiency; under 1.0 is healthy for venture-stage SaaS.
SVB collapse (March 2023) forced founders to diversify cash across 2-4 banks — Brex, Mercury, JPMorgan, Citi became standard alternatives.
Cash means cash — not credit lines, not unpaid AR, not founder personal funds. Strict accounting cash on balance sheet.
Annual contracts create lumpy cash inflow that distorts burn calculations — normalise to monthly run-rate when reporting to investors.
Frequently Asked Questions
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Gross burn is total monthly cash outflow — every dollar leaving the bank, including salaries, rent, software, hosting, marketing. Net burn is gross burn minus monthly revenue collected. For pre-revenue startups, gross burn equals net burn. For revenue-generating startups, net burn is the number that actually consumes runway — runway = cash ÷ net burn. Investors track both: gross burn for headcount/cost-structure benchmarking, net burn for capital efficiency. Carta and Bessemer publish gross burn benchmarks by ARR stage.
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Coined by Paul Graham in a 2015 essay, "Default Alive" describes a startup where monthly revenue covers monthly gross burn — the company doesn't need to raise additional capital to survive. Growth becomes a strategic choice rather than financial necessity. The opposite is "Default Dead" — the company runs out of cash before it can raise the next round. Graham's argument: founders should aim for Default Alive as early as possible, because the chair you sit in when fundraising is fundamentally different when you don't strictly need the money. This tool's verdict displays "Default Alive" when monthly revenue ≥ monthly gross burn.
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Venture canon is 18-24 months. Carta's data shows median Series A from term sheet to wire is 6 months; add 3-6 months of pre-fundraise prep; add a 3-6 month buffer for execution surprise. That's 12-18 months you need at any given moment, plus margin. Founders who fundraise with 18+ months of runway can walk away from bad term sheets and run a competitive process. Founders who fundraise with 6 months left negotiate from weakness — investors smell it and terms compress accordingly. The phrase you'll hear is "fundraise from strength".
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No. Cash on hand means strict accounting cash — actual money sitting in bank accounts you control. Exclude undrawn credit lines (they're available but not yet liquid), exclude accounts receivable (revenue earned but not collected), exclude founder personal funds (not the company's). Banks like SVB, Mercury, Brex, and JPMorgan show the cash number on the balance sheet — use that. Including any of the above inflates your apparent runway and creates dangerous over-confidence.
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Burn Multiple = net burn ÷ net new ARR in a period. It measures how much cash you spend to generate a dollar of new annual recurring revenue. Below 1.0 is best-in-class (you're growing ARR faster than you're burning); 1.0-2.0 is healthy; above 3.0 indicates capital inefficiency. The metric became popular post-2022 when growth-at-any-cost gave way to capital-efficient growth. Investors increasingly request burn multiple alongside burn rate. We don't compute it in this tool (would need ARR-delta input), but pair this tool with our MRR Calculator to derive it.
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Two views, both legitimate. For runway calculation purposes, count cash actually collected — annual contract paid USD 24,000 upfront counts as USD 24,000 of revenue this month for burn purposes, full stop. For investor reporting and operational dashboards, normalise to monthly: spread USD 24,000 across 12 months as USD 2,000 MRR. The runway-calc view answers "how long until cash runs out?", the MRR view answers "how is the business performing?" — both matter, different audiences. This tool uses the runway-calc view; the MRR view is in our MRR Calculator.
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Yes — became standard post-SVB collapse in March 2023. FDIC insurance covers only USD 250,000 per depositor per bank; anything above is exposed to bank failure. Common pattern: split operating cash between 2-4 banks. SVB / First Republic alternatives that gained share in 2023-2024 include Mercury (their Vault product partners with Goldman Sachs / Choice Financial for higher FDIC coverage), Brex (similar sweep program), JPMorgan Chase Business Banking, and Citi. Keep enough at each bank to cover 60-90 days of burn — that way no single bank failure puts you in immediate crisis.
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Three considerations. (1) Time-to-default: if runway is under 9 months and fundraise will take 4-6 months, you may not have time to close before cash-out — cut burn first to extend runway, then fundraise. (2) Market conditions: in a tight venture-funding environment, planned raises take longer and close at lower valuations; cutting burn to extend runway through the cycle often produces better long-term outcomes. (3) Operational state: if you have customers and product-market fit, raising at a slight discount is usually better than firing the people building the product. If product-market fit is unproven, cut deep to give the team another shot to find it. The scenario tool lets you sensitivity-test both paths.
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Substantially different. US salaries dominate US startup burn — a typical 10-person seed-stage US startup runs USD 150-250K/month gross burn, with 70-80% in payroll. ASEAN equivalents (Singapore-headquartered Series A startups) typically run USD 50-100K/month for the same headcount, with similar payroll ratio. Office and software costs are roughly comparable globally. The implication: ASEAN startups have structurally longer runway per dollar raised, which is why many ASEAN-founded SaaS deliberately keep engineering teams in the region while opening US sales offices only after Series B. The 18-24 month runway rule applies globally; the absolute dollar requirements differ by region.
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Report in USD. Use US norms for runway expectations (18-24 months between rounds) even if your absolute dollar burn is much lower than US comparables. US investors evaluating ASEAN-founded startups appreciate the lower cost structure as operating leverage — show in the deck that your USD 50K/month burn produces equivalent output to a US-headquartered USD 200K/month team. Two specific things to surface: (1) Default Alive status if applicable — ASEAN cost structure often makes Default Alive achievable at lower ARR; (2) burn multiple — lower-burn ASEAN startups often post sub-1.0 burn multiples that beat US comparables outright. Both translate to higher fundraise valuations.
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