Startup Runway Calculator

Runway is the most critical metric for startups - it’s how long you can survive before running out of money. This calculator helps you understand your cash position, plan fundraising timing, and make smart hiring decisions.

Interactive Calculator

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What is Runway?

Runway = Months until you run out of cash

The basic formula:

Runway = Current Cash ÷ Monthly Net Burn
Net Burn = Monthly Expenses - Monthly Revenue

Example:

• Cash in bank: $500,000
• Monthly expenses (burn): $50,000
• Monthly revenue: $10,000
• Net burn: $40,000/month
• Runway: 12.5 months

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Why Runway Matters

The Death Clock

Running out of cash is the #1 reason startups fail. Unlike profitability (which you can improve), running out of cash is game over immediately.

Key Milestones:

• 18+ months - Healthy runway, can focus on growth
• 12-18 months - Good position, start thinking about next round
• 6-12 months - Time to actively fundraise
• Under 6 months - CRITICAL - fundraise NOW or cut costs drastically

Fundraising Timeline

Most founders underestimate how long fundraising takes:

Stage	Typical Timeline
Preparing materials (deck, financials)	2-4 weeks
Getting meetings	1-2 months
Initial meetings & follow-ups	1-2 months
Due diligence	1-2 months
Legal & closing	2-4 weeks
Total	3-6 months

Critical Rule: Start fundraising when you have 9-12 months of runway. Don’t wait until you have 6 months - you’ll be negotiating from desperation.

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Components of Burn Rate

Fixed Costs

• Salaries and benefits (biggest cost, typically 60-80%)
• Rent and utilities
• Software subscriptions (AWS, tools)
• Insurance
• Legal and accounting

Variable Costs

• Marketing and advertising
• Sales commissions
• Customer acquisition costs
• Travel and events
• Contractors and freelancers

Common Burn Rates by Stage

Stage	Monthly Burn	Team Size
Pre-seed (idea stage)	$10-30k	2-3 founders
Seed stage	$50-150k	5-10 people
Series A	$200-500k	15-30 people
Series B	$500k-$1M+	30-100 people

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Calculating True Runway

Simple Method (Wrong)

Runway = Cash ÷ Net Burn

This assumes:

• Zero revenue growth
• Fixed burn rate
• No seasonality

Problem: This is overly pessimistic if you’re growing revenue.

Accurate Method (Right)

Account for:

1. Revenue growth - Your revenue is (hopefully) increasing monthly
2. Hiring plans - New hires increase burn
3. Seasonality - Some months have higher/lower revenue
4. One-time costs - Equipment purchases, moving expenses

Our calculator uses the accurate method, projecting month-by-month with revenue growth.

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Break-Even Analysis

Break-even = When revenue covers all expenses (net burn = $0)

Path to Break-Even

Example Startup:

• Current burn: $80k/month
• Current revenue: $20k/month
• Revenue growing 10% per month

Break-even calculation:

Month 1: $20k revenue vs $80k burn = -$60k
Month 2: $22k revenue vs $80k burn = -$58k
Month 3: $24k revenue vs $80k burn = -$56k
...
Month 14: $68k revenue vs $80k burn = -$12k
Month 15: $75k revenue vs $80k burn = -$5k
Month 16: $82k revenue vs $80k burn = +$2k ✓

Break-even in 16 months

Why Break-Even Matters

Once you reach break-even:

• No longer dependent on fundraising
• Control your destiny
• Can grow at your own pace
• Much stronger negotiating position

But: Many startups sacrifice break-even to grow faster (burn more on sales/marketing). This is fine IF you’re raising capital strategically.

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Fundraising Strategy

How Much to Raise?

Rule of Thumb: 18-24 months of runway

Why 18-24 months?

• 3-6 months to close the current round
• 12-18 months to hit next milestones
• 3-6 months to raise next round
• = 18-24 months total

Example:

• Current burn: $100k/month
• Current revenue: $20k/month
• Net burn: $80k/month
• Raise: $1.6M -$2M (20-25 months runway)

When to Start Fundraising

Golden Rule: Start when you have 9-12 months left.

Runway Remaining	Action
18+ months	Focus on growth, not fundraising
12-15 months	Start preparing (deck, metrics, target list)
9-12 months	Actively pitching investors
6-9 months	Urgency mode - close ASAP
Under 6 months	Crisis - consider bridge round or cost cuts

Bridge Rounds

If you’re running out of cash before closing your round:

Bridge round = Small amount (3-6 months runway) from existing investors to extend runway.

• Typically $200k-$500k
• Higher valuation/better terms than main round
• Converts to next round
• Common and not a red flag IF you have momentum

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Extending Runway: Your Options

Option 1: Reduce Burn

Easiest and fastest - cut costs immediately.

Quick Wins:

• Pause hiring (biggest impact)
• Cut marketing spend
• Renegotiate software contracts
• Move to cheaper office or go remote
• Reduce travel and events

Impact: 20-30% burn reduction can add 3-6 months runway.

Example:

• Burn: $100k/month →$70k/month (30% cut)
• Cash: $600k
• Runway: 6 months → 8.6 months (+2.6 months)

Option 2: Increase Revenue

Harder but more sustainable - grow your way out.

Tactics:

• Price increase (easiest, immediate impact)
• Upsell existing customers
• Focus on highest-ROI channels
• Accelerate sales cycles
• Add new revenue stream

Impact: 20-30% revenue increase can add 2-4 months runway.

Option 3: Raise Capital

Slowest but gives most runway - fundraise.

Pros:

• Adds 18-24 months runway
• Can invest in growth
• Validation from investors

Cons:

• Takes 3-6 months
• Dilutes ownership
• Adds pressure to grow fast

Option 4: Bridge Financing

Fast but limited - short-term solution.

Options:

• Venture debt (less dilutive)
• Revenue-based financing
• SAFE/convertible note from angels
• Line of credit

Pros:

• Faster than equity round (weeks vs months)
• Less dilutive

Cons:

• Limited amount (3-6 months)
• Debt requires repayment
• Still need to raise equity later

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Hiring Impact on Runway

Cost of Hiring

Full cost per employee:

• Salary: $100k/year =$8.3k/month
• Benefits: 20-30% = $1.7-2.5k/month
• Equipment: $3k one-time
• Total monthly: ~$10k/month

Runway Impact

Example:

• Current runway: 12 months
• Hire 3 people at $10k/month each
• Burns extra $30k/month
• New runway: 8 months (33% reduction)

Rule: Every hire reduces runway. Make sure each hire moves key metrics.

When to Hire

Runway	Hiring Strategy
18+ months	Hire strategically for key roles
12-18 months	Hire cautiously, clear ROI only
6-12 months	Hiring freeze (unless critical)
Under 6 months	Hiring freeze + potential layoffs

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Burn Rate Benchmarks

By Revenue Stage

ARR	Monthly Burn	Burn Multiple*
$0	$30-80k	N/A
$100k	$50-150k	6-18x
$1M	$150-400k	1.8-4.8x
$10M	$1-3M	1.2-3.6x

*Burn Multiple = Annual Burn ÷ ARR (lower is better)

Efficient vs. Inefficient Burning

Efficient burn:

• Burn multiple under 2x
• Clear unit economics (LTV/CAC over 3)
• Improving metrics month-over-month
• Revenue growing faster than burn

Inefficient burn:

• Burn multiple over 3x
• Spending without metric improvement
• Burn growing faster than revenue
• No clear path to break-even

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Real Examples

Example 1: SaaS Startup (Healthy)

Situation:

• Cash: $1.2M
• Monthly burn: $80k
• Monthly revenue: $30k (growing 15%/month)
• Team: 8 people

Analysis:

• Net burn: $50k/month
• Simple runway: 24 months
• With revenue growth: 30+ months (will reach break-even)
• Status: Healthy - focus on growth

Action: Don’t fundraise yet. Use next 12 months to hit $1M ARR, then raise Series A.

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Example 2: E-commerce Startup (Critical)

Situation:

• Cash: $180k
• Monthly burn: $60k
• Monthly revenue: $25k (growing 5%/month)
• Team: 5 people

Analysis:

• Net burn: $35k/month
• Runway: 5 months
• Won’t reach break-even in time
• Status: CRITICAL

Action:

1. Immediately start fundraising (should have started 3 months ago)
2. Cut burn to $40k/month (6 months runway)
3. Consider bridge round from existing investors
4. Worst case: Layoffs to extend runway to 9 months

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Example 3: Pre-Revenue Startup (Normal)

Situation:

• Cash: $500k (just raised seed)
• Monthly burn: $40k
• Monthly revenue: $0
• Team: 4 people (founders + 1)

Analysis:

• Runway: 12.5 months
• No revenue yet (building product)
• Status: Normal for pre-revenue

Action:

1. Launch MVP in 3-4 months
2. Get first paying customers by month 6
3. Start fundraising at month 9 (when you have 3-6 months of revenue)
4. Target: Close Series A before month 15

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Common Mistakes

1. Not Tracking Runway Weekly

❌ “We check our bank account monthly”

✅ Track burn weekly. Know your exact runway at all times.

2. Waiting Too Long to Fundraise

❌ “We have 6 months left, plenty of time”

✅ Start at 9-12 months. Fundraising takes longer than you think.

3. Ignoring Revenue Growth

❌ Using simple runway calculation (cash ÷ burn)

✅ Account for revenue growth. Your runway is likely longer than simple math.

4. Over-Hiring Too Fast

❌ “We raised $2M, let’s hire 10 people!”

✅ Hire strategically. Every hire reduces runway significantly.

5. Not Having a Plan B

❌ “We’ll definitely close our round by December”

✅ Have backup plans: cost cuts, bridge financing, alternative revenue.

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Runway Red Flags

Danger Signs

🚩 Under 6 months runway - Crisis mode 🚩 Burn growing faster than revenue - Inefficient scaling 🚩 No clear path to break-even - Fundraising dependency 🚩 Burn multiple over 3x - Unsustainable burn 🚩 Negative revenue growth - Fundamental problem

What Investors Look For

When fundraising, investors care about:

1. 18+ months runway - Shows you’re not desperate
2. Improving unit economics - Path to profitability
3. Revenue growing faster than burn - Efficient scaling
4. Clear use of funds - What will this round accomplish?
5. Next milestone visibility - What gets you to next round?

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Key Takeaways

1. Track runway weekly - It’s your most critical metric

2. 18-24 months is ideal - Gives you breathing room

3. Start fundraising at 9-12 months - Fundraising takes 3-6 months

4. Account for revenue growth - Simple calculation is too pessimistic

5. Every hire matters - Each person reduces runway significantly

6. Have multiple options - Fundraising, cost cuts, bridge financing

7. Don’t panic at under 12 months - But do take action

8. Break-even changes everything - No longer dependent on fundraising

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Further Resources

• “The Startup Founder’s Guide to Cash Management” by Kruze Consulting
• “How to Manage Startup Burn Rate” by Y Combinator
• “Fundraising Timeline” by NFX
• BenchmarkIT - Compare your burn rate to similar startups
• Pilot.com - Bookkeeping + burn rate dashboards

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Understanding and managing your runway is the difference between life and death for startups. Use this calculator to model different scenarios and make data-driven decisions about hiring, fundraising, and growth strategy.