What is a good burn rate for a startup?

There is no universal answer -- burn rate must be evaluated relative to revenue trajectory and stage. A pre-revenue startup burning $80,000/month is different from a post-product-market-fit company burning $200,000/month with $150,000 in monthly revenue. Investors focus primarily on net burn relative to growth rate. A company burning $100,000/month while growing revenue 20% month-over-month is a different risk profile from one with flat revenue at the same burn. The goal is to ensure burn rate is matched to the evidence that growth justifies the spend.

What is the difference between gross burn and net burn?

Gross burn is total monthly cash spending -- all expenses before revenue is counted. Net burn is total spending minus cash revenue -- the actual monthly reduction in cash. Gross burn matters for understanding total cost structure. Net burn matters for runway calculation. A business with $300,000 gross burn and $280,000 in cash revenue has $20,000 net burn -- a very different position from a business with $300,000 gross burn and $0 revenue.

When should I start fundraising relative to my runway?

Start fundraising when you have at minimum 9 to 12 months of runway remaining, preferably 12 to 18 months. Most institutional funding processes (seed through Series B) take 3 to 6 months from first meeting to cash in the bank. Running fundraising with less than 6 months of runway is negotiating under duress -- investors know it, terms reflect it, and closing timelines may not align with your cash needs.

How do I calculate runway if my revenue is growing?

If revenue is growing at a consistent rate, you can project future net burn by modeling revenue growth each month against relatively fixed expenses. The runway is then the number of months until cumulative cash flows deplete your current balance -- not a simple division. For growing businesses, a monthly cash flow forecast is more accurate than the simple static runway formula.

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Burn Rate and Runway Calculator

Calculate monthly net burn rate, gross burn, cash runway in months, funding gap, and 24-month cash projection for startups using 2026 venture capital benchmarks by stage.

Startup Financial Details

Cash on Hand ($)

Company Stage

Monthly Financials

Monthly Revenue ($)

Enter 0 for pre-revenue startups

Monthly Revenue Growth (%)

Month-over-month growth rate

Monthly Operating Expenses ($)

Monthly Expense Growth (%)

Planned hiring, scaling costs, etc.

Planned Funding (Optional)

Expected Funding Amount ($)

Expected Funding Timeline (months)

Months from now until funding closes

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Introduction

Every startup founder and early-stage business owner has one number they must track above all others: runway. Runway is how many months of operation your current cash reserves will fund at the current rate of spending. When runway runs out, the business stops -- regardless of how promising the product is or how many term sheets are in conversation. The CB Insights startup failure analysis consistently ranks running out of cash among the top three reasons startups fail, often cited alongside weak market fit. Burn rate is the monthly rate at which a business consumes cash above and beyond its revenue. Gross burn is total monthly spending. Net burn is the difference between spending and revenue -- the actual monthly cash reduction. This calculator computes both burn rates, your current runway in months, the date your cash runs out at the current trajectory, and the revenue level needed to reach cash-flow breakeven.

What This Calculator Does

This burn rate and runway calculator takes your current cash balance, monthly cash revenue, and monthly total cash expenses to produce gross burn rate, net burn rate, current runway in months, projected date of cash depletion, and the revenue increase needed to reach zero net burn (cash-flow breakeven). Use it for investor reporting, fundraising timing, and monthly cash management.

The Formula

Gross Burn Rate = Total Monthly Cash Expenses | Net Burn Rate = Monthly Cash Expenses - Monthly Cash Revenue | Runway (Months) = Current Cash / Net Burn Rate

Gross burn measures total monthly cash outflows regardless of revenue. Net burn is the actual monthly cash reduction -- how much the bank account falls each month after revenue is received. When monthly revenue exceeds monthly expenses, the net burn becomes negative (cash-flow positive) and the runway calculation no longer applies -- the business is generating cash. Runway divides current cash by net burn: at $500,000 cash and $83,000 net burn, runway is 6 months. Note: if runway drops below 6 months, fundraising should already be underway -- most funding processes take 3 to 6 months to close.

Step-by-Step Example

Enter current cash balance

A Series A startup has $1,840,000 in its operating account at the start of the month. Enter $1,840,000.

Enter monthly revenue and expenses

Monthly recurring revenue (cash collected): $68,000. Monthly expenses: Payroll $142,000, benefits $22,000, AWS/infrastructure $18,000, office and facilities $12,000, marketing $28,000, other $9,000. Total monthly expenses: $231,000.

Calculate burn rates

Gross burn: $231,000/month. Net burn: $231,000 - $68,000 = $163,000/month.

Calculate runway and breakeven

Runway: $1,840,000 / $163,000 = 11.3 months. Cash-flow breakeven requires: monthly revenue = $231,000. Revenue must grow by $163,000/month (240% from current) to reach zero net burn. At 15% monthly revenue growth, breakeven is reached in approximately month 9.

Real-World Use Cases

Timing a Fundraising Round

A founder calculates 11 months of runway in January. Industry data from [Pitchbook](https://pitchbook.com/) suggests Series A processes average 4 to 6 months from first outreach to close. To maintain a 2-month cash buffer before closing, fundraising must begin no later than month 4. The runway calculation converts an abstract cash concern into a specific action deadline.

Evaluating a Hiring Decision Against Runway Impact

A pre-revenue startup considers hiring two engineers at $140,000 each in fully-loaded annual cost ($23,333/month combined). Current runway: 18 months. With the hires, net burn increases by $23,333/month: $1,800,000 / ($95,000 + $23,333) = 15.2 months. The decision costs 2.8 months of runway. The question becomes: do these hires accelerate the product timeline enough to justify the 2.8-month reduction in safety margin?

Negotiating Terms with Investors Based on Runway

A founder with 14 months of runway is negotiating valuation with a VC who is pushing for aggressive terms. A founder with 6 months of runway negotiates from a position of weakness -- the VC knows time pressure exists. The 14-month runway creates negotiating leverage: the founder can walk from a bad term sheet and continue building without an immediate cash emergency. Knowing your runway is knowing your negotiating position.

Comparison

Runway	Situation Assessment	Recommended Action
18+ months	Strong position	Execute growth plan; begin relationship-building with investors
12-18 months	Healthy buffer	Evaluate funding timing; ensure burn is declining toward breakeven
6-12 months	Caution zone	Begin active fundraising immediately; identify cost reduction options
3-6 months	High urgency	Parallel-path: fundraising + aggressive cost reduction + revenue acceleration
< 3 months	Critical	Emergency cost cuts; bridge financing; strategic conversations about options

Common Mistakes to Avoid

Using GAAP revenue instead of cash revenue in the calculation. Revenue recognized under accrual accounting is not the same as cash received. A $100,000 enterprise contract signed in January may collect in quarterly installments: $25,000 in January, March, June, and September. The runway calculation uses only cash actually received in the period -- which may be far below recognized revenue.
Not updating the calculation monthly. Burn rate changes as you hire, run campaigns, or close new revenue. A runway calculation from 90 days ago may be significantly wrong. Update it at the start of every month with actual cash flows from the previous month.
Excluding founder salaries and deferred compensation from burn rate. Some founders defer salary to make the burn rate look more favorable. Deferred salary is a real liability that will either be paid later (reducing runway when paid) or converted to equity (diluting existing shareholders). Both scenarios have financial consequences. Use actual cash outflows including all compensation paid.

Frequently Asked Questions

Accuracy and Disclaimer

Burn rate and runway calculations are estimates based on current spending and revenue rates. Actual runway will vary due to revenue fluctuations, irregular expenses, and changes in spending. These calculations should be updated monthly with actual figures. Results are for planning purposes only and do not constitute financial advice.

Conclusion

Runway is not a forecast -- it is a constraint. Every business decision should be evaluated against its impact on runway first, particularly during pre-revenue and early-revenue stages. Adding headcount, signing a lease, or launching a campaign all consume runway. The runway calculation should be updated monthly and reviewed before any significant spending commitment. To project how individual cost categories drive burn rate over time, use the Cash Flow Forecast Calculator. For established businesses focused on operational efficiency, the Working Capital Calculator shows the structural cash position alongside the burn metric.