Cash runway is the number of months a company can continue operating at its current burn rate before running out of cash. It is calculated by dividing current cash by net burn rate (monthly expenses minus monthly revenue). Runway is the single most critical financial metric for pre-profitability startups and growth-stage companies.
How much runway should a startup have?
The general rule is 18-24 months of runway at all times. Fundraising typically takes 6-12 months, so a company with less than 18 months of runway should already be in fundraising conversations. Companies with under 6 months of runway are in crisis mode and should immediately explore bridge financing, cost cuts, or revenue acceleration.
What is the difference between gross burn and net burn?
Gross burn is total monthly cash outflows (all expenses). Net burn is gross burn minus revenue — the actual amount of cash consumed each month. This calculator uses net burn, which gives you the true runway picture. A company with $150K in expenses and $85K in revenue has a net burn of $65K/month, not $150K.
How can I extend my runway without raising money?
The fastest levers are: reduce headcount or move to variable compensation, cut non-essential software subscriptions, renegotiate vendor contracts, accelerate collections on accounts receivable, offer discounts for annual prepayment, defer non-critical hires, and reduce marketing spend to only profitable channels. Each $10K reduction in monthly expenses adds one month of runway per $100K of remaining cash.