Startup Runway Calculator

The calculator divides cash in the bank by net monthly burn: runway = cash ÷ net burn. With the defaults, $500,000 and a $40,000 net burn give 12.5 months of runway.

The second line, Out of cash around, rounds down to whole months: 12 months from now. Read it as the number of full months of costs you can pay. Partway through the 13th month, the money runs out.

The result is a straight line. It assumes the burn stays exactly where it is, which is rarely true for a company that is hiring or growing. The sections below show how to adjust for that.

Enter net burn: cash going out minus cash coming in during a typical month. If you spend $65,000 a month and collect $25,000 from customers, net burn is $40,000.

Gross burn, the $65,000 of spending alone, gives 7.7 months. That is the runway if revenue stopped completely, which is a useful worst case to keep in mind. The 12.5 months from net burn is the one to plan with, as long as the revenue is reliable.

Use cash figures from your bank account, not profit from your accounts. Annual prepayments from customers, a large one-off bill or a loan repayment can make one month's burn very different from the profit and loss figure. Averaging the last three months of actual net burn smooths out one-off swings.

A hiring plan or rising costs shorten the runway faster than the headline suggests. Two adjustments, both starting from $500,000 and $40,000:

• Planned hires. If burn rises to $55,000 from month 4, the first three months use $120,000. Enter the remaining $380,000 at $55,000 and the calculator shows 6.9 months, for a total of about 9.9 months, not 12.5.
• Steady growth in costs. If burn rises 3% each month, you can pay 10 full months and are left with about $41,445, less than the next month's roughly $53,757. Runway is about 10.8 months.

For anything more complex, list cash in and cash out month by month in a spreadsheet and find the month the balance turns negative. Use this calculator to sense-check the answer.

Often the question is the other way round: what burn can we afford to reach a milestone? Divide the cash by the number of months you need.

To keep $500,000 lasting 18 months, net burn has to average no more than $27,777 a month. If you also want a cash buffer for the months a fundraise or a big contract takes to close, subtract that buffer from the cash first. Holding back $100,000 and still lasting 18 months means a burn of $22,222.

Check these figures in the calculator: enter the cash and your target burn, and the runway should match the months you planned.