Burn Rate and Runway Calculator
Burn rate and runway are the two most critical metrics for any company that is spending more than it earns. They answer the essential question: how long does the business have before cash runs out? For startups, understanding burn rate is fundamental to planning fundraising timelines, making hiring decisions, and prioritising initiatives. For any business facing a difficult period, tracking runway helps ensure that corrective actions are taken early enough to matter.
Burn rate and runway formulas
Gross Burn Rate = Total Monthly Expenses
Net Burn Rate = Monthly Expenses - Monthly Revenue
Runway (months) = Cash Balance / Net Burn Rate
Example: Cash $1,200,000, Expenses $150,000/mo, Revenue $30,000/mo. Gross Burn = $150,000. Net Burn = $120,000. Runway = $1,200,000 / $120,000 = 10.00 months.
Runway benchmarks and planning
- 18 to 24 months of runway is generally considered safe for a pre-revenue startup seeking funding.
- Begin fundraising at 9 months of runway: the average seed round takes 3 to 4 months to close.
- Extending runway by 20% can mean the difference between a successful fundraise and a down round.
- Review burn monthly: small increases in expenses can quietly erode runway faster than expected.
- Model both optimistic and conservative revenue scenarios to stress-test your runway.
Frequently asked questions
What is burn rate?
Burn rate is the rate at which a company spends its cash reserves. Gross burn rate is total monthly cash expenditure. Net burn rate is the monthly cash loss after subtracting any revenue received. Net burn rate is what determines how fast cash disappears.
What is runway?
Runway is the number of months a company can continue operating before it runs out of cash, based on its current net burn rate. A runway of 18 months is a common target for startups seeking Series A funding.
What is the difference between gross and net burn?
Gross burn is total monthly spending with no offset. Net burn is gross burn minus monthly revenue. If you spend $100,000 per month and earn $30,000 in revenue, your gross burn is $100,000 and your net burn is $70,000.
How can I extend my runway?
You can extend runway by cutting costs (reducing gross burn), growing revenue (reducing net burn), raising additional capital, or a combination of all three. Many founders aim for at least 12 to 18 months of runway before starting a fundraise.
When should I start fundraising?
Most advisors recommend beginning a fundraise when you have 6 to 9 months of runway remaining. Fundraising processes typically take 3 to 6 months, so starting too late risks running out of cash before closing a round.
Official sources
- SBA: Manage Your Business Finances.
- FASB ASC 230: Statement of Cash Flows.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.