Burn rate and runway: calculate and track

Runway is the most important number a startup founder watches, because it sets a hard deadline: the date you either become cash-flow positive, raise, or run out. Getting it right means understanding burn properly first.

Gross burn vs net burn

Gross burn = total cash spent per month (payroll, hosting, tools, ads, rent). Net burn = gross burn − cash collected from customers. Net burn is the number that matters for runway, because revenue offsets spend. A company with $80k gross burn and $50k of cash collections has a $30k net burn.

Calculating runway

Runway (months) = current cash balance ÷ average monthly net burn. With $300k in the bank and $30k net burn, runway is 10 months. The honest version uses a trailing average net burn (last 3 months), not a single cherry-picked good month.

Watch the trend, not just the number

A flat 10-month runway is fine; a 10-month runway that was 14 months two months ago is an alarm. Track burn and runway as a trend so acceleration is visible. Rising net burn with flat revenue means runway is collapsing faster than the headline implies.

The "default alive" question

Project revenue growth and cost growth forward. If, at your current growth rate, revenue crosses expenses before cash runs out, you're "default alive" — you don't strictly need to raise. If not, you're "default dead" and the runway clock is real. A dashboard that plots projected cash against the runway line makes this obvious months ahead.

Levers when runway gets short

• Cut net burn — the fastest lever; every dollar of cost cut extends runway directly.
• Pull collections forward — annual prepay deals convert future MRR into cash now.
• Raise — but start while you have 6+ months, never at 2.

What to put on the dashboard

• Cash balance (current).
• Gross and net burn, last 6 months as a trend.
• Runway in months, with a target line.
• A projected cash curve so the "out of money" date is visible.

The template we recommend computes net burn and runway from your cash inputs alongside your MRR and churn, so the survival number sits next to the growth numbers that drive it.

Frequently asked questions

How do you calculate runway?

Runway in months = current cash balance ÷ average monthly net burn. Use a trailing 3-month average net burn rather than a single good month for an honest figure.

What's the difference between gross and net burn?

Gross burn is total monthly cash spent. Net burn is gross burn minus cash collected from customers. Net burn is what drives runway because revenue offsets spend.

When should I start raising based on runway?

Start while you have at least 6 months of runway. Raising at 2 months gives investors leverage and gives you no time to walk away from a bad term sheet.

Page built 2026-06-14 from public, dated buying-intent signals. Updated as new signals land.

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