Startup Runway Calculator
Estimate how many months your startup has before it runs out of money.
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Calculate Your Startup's Cash Runway and Burn Rate
Our Startup Runway Calculator helps founders and investors understand how many months of cash a company has left before it runs out of money, a critical metric for survival and fundraising.
What is a Startup Runway Calculator?
A Startup Runway Calculator is a financial planning tool used to determine how long a company can continue operating before it exhausts its cash reserves. It calculates the "runway"—the number of months until the cash balance hits zero—based on the company's current cash, monthly revenue, and monthly expenses. This is arguably the most critical metric for an early-stage, venture-backed startup, as it dictates the timeline for achieving profitability or securing the next round of funding.
How It Works: The Burn Rate Formula
The calculator first determines your net burn rate and then uses it to project your cash balance over time:
Net Burn Rate = Monthly Expenses - Monthly Revenue
Runway (Months) = Current Cash Balance / Net Burn Rate
Our calculator enhances this simple formula by allowing you to input monthly growth rates for both revenue and expenses, providing a more dynamic and realistic projection.
Interpreting Your Results: When to Fundraise
The key result is your **Cash Runway in months**. This number is your countdown clock. For example, a 12-month runway means you have one year to either become profitable or raise more capital. The **Cash Zero Date** gives you a hard deadline. Founders should typically start the fundraising process at least 6 months before their cash zero date, as it can be a lengthy and unpredictable process.
Common Startup Finance Myths
- Myth 1: We can raise money anytime. Fundraising is dependent on market conditions and your startup's traction. You cannot assume you'll be able to raise capital whenever you want. Always plan for a long fundraising cycle.
- Myth 2: More funding is always better. While capital is necessary, raising too much money too early can lead to a high valuation that's difficult to grow into, undisciplined spending, and excessive dilution for the founders.
- Myth 3: We should spend aggressively to grow at all costs. While growth is critical, "growth at all costs" can quickly lead to a high burn rate and a short runway. It's crucial to balance growth with efficient spending and a clear path to profitability.
Frequently Asked Questions
How do you calculate startup runway?
Startup runway is calculated by dividing your current cash balance by your monthly net burn rate. The formula is: Runway (in months) = Cash Balance / (Monthly Expenses - Monthly Revenue). Our calculator projects this forward, accounting for growth in revenue and expenses.
What is a good startup runway?
A good runway for an early-stage startup is typically 12 to 18 months. This provides enough time to hit significant milestones and demonstrate traction before needing to raise the next round of funding. Less than 6 months is often considered a critical danger zone.
What is burn rate?
Burn rate is the rate at which a company is losing money. Net burn is calculated as Monthly Expenses minus Monthly Revenue. Gross burn refers to just the total Monthly Expenses. Knowing your burn rate is essential for managing your cash and runway.
How can a startup extend its runway?
A startup can extend its runway by either increasing revenue (e.g., acquiring more customers, increasing prices) or decreasing expenses (e.g., cutting non-essential spending, reducing headcount). The goal is to lower the monthly net burn rate or become profitable.
Tips for Extending Your Runway
- Focus on Unit Economics: Ensure that your Customer Acquisition Cost (CAC) is significantly lower than your Customer Lifetime Value (LTV).
- Cut Non-Essential Spending: Regularly audit your expenses for unnecessary software, travel, or marketing spend that isn't generating a clear return.
- Increase Revenue Efficiency: Look for opportunities to upsell existing customers or increase your prices if the market allows.
- Model Different Scenarios: Use this calculator to model best-case, worst-case, and likely scenarios for your growth and expenses to understand your financial buffers.
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