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Audit your financial survival. Calculate your remaining runway based on cash on hand and monthly net burn.
Step-by-step breakdown of the underlying equations.
Startup runway measures the number of months an early-stage company can sustain operations before depleting its cash reserves, assuming current monthly net burn rate remains constant. Accurately modeling runway is fundamental to venture capital fundraising timing, hiring roadmaps, and default alive vs. default dead planning.
Worked Example:\nA seed-stage SaaS company maintains $500,000 in treasury bank reserves. Total monthly expenses (gross burn) average $65,000, while recurring customer collections generate $20,000 in monthly revenue:\n• Monthly Net Burn: $65,000 − $20,000 = $45,000/month\n• Cash Runway: $500,000 / $45,000 = 11.1 months\n• Fundraise Trigger: With institutional venture rounds averaging 4 to 6 months to solicit term sheets, perform diligence, and close funds, fundraising must commence no later than month 5 (when 6 months of runway remain).
Runways under 6 months indicate critical insolvency risk ('Red Alert'). Runways between 6 and 12 months require strict headcount controls and active investor outreach. Runways beyond 18 months signify strong operational stability.
Gross burn represents the total sum of cash leaving the bank account every month (payroll, servers, legal, leases) without considering incoming revenue. Net burn is gross burn minus incoming cash collections. Runway is calculated using net burn.
A startup is 'Default Alive' if, under its current trajectory of revenue growth and expenditure, its existing cash reserves will last until the business reaches cash-flow break-even without needing external investor capital.
Startups should initiate fundraising when they have 9 to 12 months of runway remaining. Attempting to fundraise with fewer than 6 months of cash severely reduces leverage, invites punitive down-round terms, and risks sudden bankruptcy if market conditions tighten.
No. Runway calculations track strict liquid cash flow. Non-cash accounting deductions (such as stock-based compensation, depreciation, and amortization) do not deplete bank balances and must be excluded from monthly net burn.
Venture debt principal repayment schedules and loan covenants (such as trailing minimum liquidity requirements) reduce usable cash reserves and increase monthly debt service outlays, shortening effective runway.
Data verified: September 2026