Runway, Burn Rate and How Long Your Cash Really Lasts

Calculate gross and net burn, model revenue growth, and decide when to fundraise or cut.

Runway is the number of months a company can operate before cash runs out. It is the single most important number for an early-stage founder because every other plan depends on it.

Gross burn vs net burn

• Gross burn = total monthly operating expenses.
• Net burn = expenses minus revenue — the actual monthly cash drain.

With 120,000 in the bank, 15,000 of expenses and 3,000 of revenue, net burn is 12,000 and simple runway is 10 months.

Adding growth

If revenue grows 5% a month, each month's net burn shrinks slightly and runway stretches to about 11 months. Growth helps, but at small revenue bases it rarely saves a company on its own — cost discipline does.

The fundraising clock

Raising capital commonly takes several months from first meeting to money in the bank. Many advisors suggest starting with at least 6–9 months of runway remaining so you are not negotiating from desperation.

Default alive or default dead?

Ask: if nothing changes — same costs, same growth — does revenue overtake expenses before cash runs out? If yes, you are “default alive”. If not, you need to raise, cut or change the growth rate.

Extending runway

1. Cut the largest fixed costs first; small cuts rarely move runway.
2. Raise prices for new customers.
3. Collect receivables faster and offer annual prepayment discounts.
4. Pause experiments that have not shown signal in 90 days.

Model it with the runway calculator and stress-test your unit economics with the CAC & LTV calculator.