Burn Rate Calculator: Gross Burn, Net Burn & Runway for Startups

Running out of cash is one of the top reasons startups die. Do not let yours be one of them.

  • Instant result
  • No sign-up
  • Visible assumptions
  • Deterministic calculation

In 30 seconds: Visualize your runway under different spending and growth scenarios. You will know exactly when you need to raise or cut. Deterministic calculation with auditable formulas. The result is indicative — adjust the assumptions to reflect your real operation.

Runway isn't measured by simply dividing cash by burn — it also depends on how burn changes over months (hiring, churn, enterprise deals). Paul Graham coined the 'default alive' rule: a startup is default alive if, assuming current revenue and burn growth, it reaches profitability before cash runs out. If not, it is default dead and depends on closing another round. This calculator gives the honest first projection — for A/B/C scenarios use the advanced simulator.

Practical example

Seed startup with $1.5M USD in the bank, monthly burn $200,000 (gross), current MRR $80,000 growing 8% month over month.

Net burn month 1: $200,000 − $80,000 = $120,000.

If MRR grows steadily 8% monthly: month 6 MRR = $80,000 × 1.08^5 = $117,548. Net burn month 6: $200,000 − $117,548 = $82,452.

Linear runway at current burn: $1,500,000 ÷ $120,000 = 12.5 months. Real runway with growing MRR: ~17 months (cash depletes more slowly as revenue grows).

If hiring runs away and fixed costs go to $260,000 with MRR unchanged: runway drops to 10 months. Each extra $20K of burn costs 2 months of runway in this profile.

Operating recommendation: if net burn does not project to hit $0 before month 18 (standard runway to close Series A), pause non-essential hiring and shift budget to revenue initiatives. Series A success rate with runway < 9 months drops below 30% per First Round Capital — investors smell the urgency and push for harsher terms.

Industry use cases

Pre-seed

Burn $20-60K/month, runway target 18-24 months. Zero revenue is normal. Reserves determine validation speed. Each $8K/month hire costs 4-6 weeks of runway in this profile — hire only if the problem they solve is validated.

Seed

Burn $80-200K/month with growing MRR. Runway target 12-18 months post-round. Watch for hires that raise burn 30%+ per month — a senior hire goes from exception to default without you noticing. Keep hiring under a revenue cap: every $30K of new MRR justifies one hire.

Series A

Burn $250-600K/month. Key metric: net burn (gross burn − MRR). Default alive: net burn negative within 6 months. If burn multiple > 2x for 3 sustained quarters, the model is burning capital without returns — cut before the board does.

Series B+

High burn ($1M+/month) paired with growing ARR. Measure efficiency with Burn Multiple = Net Burn ÷ Net New ARR. < 1.0 is excellent, 1.0-2.0 healthy, > 2.0 problematic. Bessemer's cohort reports a 1.4 average Burn Multiple for SaaS Series B in 2024.

Methodology and assumptions

How results are calculated, what we assume when modeling, and where the method loses precision.

Formula

Ending balance = Opening balance + Inflows − Outflows · Runway = Balance ÷ |Monthly burn|

Assumptions

  • Inflows and outflows distributed evenly through the month.
  • Lines of credit or factoring not included unless entered as additional inflows.
  • Inflation treated as flat within the projection horizon.

Applicability limits

  • Runway becomes unreliable with less than 3 months of history.
  • Large one-off events (annual taxes, year-end bonuses) must be entered as point items.
  • Does not model depreciation: it works on cash, not accounting profit.

Sources

  • Brealey, Myers & Allen — Principles of Corporate Finance (13th ed., McGraw-Hill).
  • Internal editorial estimate based on industry best practices.

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Need more depth? The advanced simulator models 3 scenarios from a free-text description of your business. Advanced Cash Flow Simulator →

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Calculator guide

What it calculates and who it is for

This calculator projects a startup's cash month by month and answers the two questions that define its survival: how much money do I burn each month (burn rate) and how many months of life remain (runway)? Enter revenue, fixed expenses, variable expense percentage, collection days and your cash reserve, and you get the monthly net flow, the runway and the balance trajectory over your chosen horizon.

It is aimed at founders and finance leads of startups and early-stage businesses running planned losses who need to know — with numbers, not feelings — when the money runs out and how much room there is to grow or raise.

Inputs

Monthly revenue
Current average monthly billing. For a pre-revenue startup enter zero: the model still works and runway becomes the central number.
Fixed expenses
Spending that does not depend on sales: payroll, rent, infrastructure, subscriptions. In early stages this is usually most of the burn.
Variable expense %
The share of revenue spent on costs that scale with sales: commissions, payment processing, cost to serve.
Collection days
How long customers take to pay you. With upfront collection (card-billed subscriptions) enter 0; with B2B invoicing, 30-90.
Cash reserve
Money available in the bank today: the capital the burn consumes.
Months to project
The projection horizon; 12 months is the usual reference for planning a round.

Results you get

Monthly net flow (net burn)
Revenue minus fixed and variable expenses. When negative, it is your net burn: the money the operation consumes each month.
Runway
Reserve divided by total monthly spend: the months you survive if revenue stopped entirely. The conservative measure of remaining life.
Balance projection
The cash trajectory month by month over the horizon, incorporating the first-month collection lag.
Minimum balance and its month
The lowest cash point in the projection and when it happens: the minimum reserve your plan requires.
Crisis month
The first month the projected balance crosses zero, if it does: the real deadline for financing or profitability.

Methodology and assumptions

Variable expenses = Revenue × (Variable % ÷ 100)

Monthly net flow = Revenue − Fixed expenses − Variable expenses

Accounts receivable = Revenue × (Collection days ÷ 30)

Balance[month 1] = Reserve + Net flow − Accounts receivable

Balance[month N] = Balance[month N−1] + Net flow

Runway = Reserve ÷ (Fixed + Variable expenses)

Runway is computed against total spend (gross burn), not net flow: it measures worst-case survival, with revenue at zero. The collection lag hits the first projected month: money billed but not collected is subtracted from the starting balance.

Worked example

Hypothetical example for illustration. The numbers reproduce exactly when entered into the calculator on this page.

Worked example: a startup bills $80,000 a month, spends $95,000 fixed, has 15% variable expenses, collects at 30 days and holds a $600,000 reserve; 12-month projection.

Variable expenses: $80,000 × 0.15 = $12,000. Total spend (gross burn): $95,000 + $12,000 = $107,000.

Net flow (net burn): $80,000 − $107,000 = −$27,000 per month.

Runway: $600,000 ÷ $107,000 = 5.6 months with no revenue.

Month 1: $600,000 − $27,000 − $80,000 of receivables = $493,000. From there the balance falls $27,000 per month: $466,000 in month 2 and $196,000 at the end of month 12.

Reading: with stable revenue there is no crisis month within the horizon, but the year ends with less than two months of total spend in the bank — the round or break-even must arrive first.

How to interpret the result

Distinguish the two burns: gross burn ($107,000 in the example) measures what operating costs; net burn ($27,000) measures what you lose after revenue. Conservative runway uses the former; your pace of improvement is read in the latter.

Month 1 almost always looks worse than the following ones: the collection lag turns sales into receivables. That effect is real — it is why growing fast with slow collections consumes cash even when the business is profitable on paper.

Use the minimum balance as your planning metric: if the projected minimum sits near zero, any collection delay or unexpected expense empties the account before the theoretical crisis month.

Limitations and when not to use it

  • The model assumes constant revenue and expenses over the horizon: it does not project sales growth or future hires. For growth scenarios, recalculate at different revenue levels and compare trajectories.
  • The collection lag is modeled as a one-time first-month impact, not as continuously rotating receivables: an approximation that understates cash pressure if sales grow month over month.
  • It excludes taxes, financing, credit lines and capital injections: it projects the pure operation.
  • A frequent mistake is counting committed money (taxes due, accrued bonuses) as reserve: the real reserve is the cash truly available.
  • Do not use it as a substitute for a detailed budget or to manage collections: it is a survival and round-planning tool, not accounting.

From theory to calculation

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Frequently asked questions

1Is runway computed with gross burn or net burn?
This calculator uses gross burn (total spend): it answers how many months you live if revenue stops. If you prefer the optimistic runway with stable revenue, divide your reserve by net burn: with the example, $600,000 ÷ $27,000 = 22 months — note how much the answer changes with the assumption.
2How much runway is enough?
It depends on your next milestone: the practical rule is that cash must cover the time to that milestone plus the fundraising process after it, which usually takes several months. The right number comes from your milestone calendar, not from a standard.
3How do I simulate a future hire?
Recalculate with the new fixed expenses starting today and compare both scenarios' runway. The difference in months is that hire's real cost in company lifetime.
4Why does my first month drop so much more than the rest?
Because of receivables: what you billed at 30+ days is not in the bank yet, so the starting balance absorbs both the month's flow and the collection lag. It is the portrait of the working capital growth consumes.
5Is it useful if my business is already profitable?
Yes: with positive net flow the projection shows cash accumulation and runway matters less. It remains useful for measuring how many months of expenses your reserve covers — the business's emergency fund.

Last updated: July 19, 2026

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