CalculateY
Quick Answer
A startup with $600,000 in cash, $80,000 in monthly expenses, and $20,000 in monthly revenue has a net burn rate of $60,000/month and an estimated runway of approximately 10 months.
Enter 0 if pre-revenue.
Common Examples
| Input | Result |
|---|---|
| $600,000 cash, $80,000 expenses, $20,000 revenue | Net burn $60,000/mo, ~10.0 months runway |
| $1,000,000 cash, $120,000 expenses, $40,000 revenue | Net burn $80,000/mo, ~12.5 months runway |
| $250,000 cash, $50,000 expenses, $0 revenue | Net burn $50,000/mo, ~5.0 months runway |
| $500,000 cash, $30,000 expenses, $30,000 revenue | Net burn $0/mo, infinite runway (cash-flow neutral) |
| $2,000,000 cash, $200,000 expenses, $75,000 revenue | Net burn $125,000/mo, ~16.0 months runway |
How It Works
This calculator uses the standard burn rate formulas for startups and growing businesses:
Gross Burn Rate = Total Monthly Expenses
Net Burn Rate = Monthly Expenses - Monthly Revenue
Runway (months) = Cash Balance / Net Burn Rate
Where:
- Gross Burn Rate = total monthly operating expenses regardless of revenue
- Net Burn Rate = the actual cash decrease per month after accounting for revenue
- Cash Balance = total cash and liquid assets currently available
- Runway = estimated number of months before the company runs out of cash at the current rate
Gross vs. Net Burn Rate
Gross burn rate represents total monthly spending and is useful for understanding the overall cost structure. Net burn rate subtracts revenue and reflects how quickly the company actually depletes its cash. For pre-revenue startups, gross and net burn rates are identical. As revenue grows, the gap between the two widens.
Runway Benchmarks
Most startup advisors and investors consider 12 to 18 months of runway healthy. Below 12 months, companies typically begin fundraising or implementing cost reduction strategies. Below 6 months, the situation is generally considered critical.
Cash-Out Date
When the net burn rate is positive (expenses exceed revenue), the calculator projects the approximate date when cash reaches zero. This projection assumes constant monthly spending and revenue, which is a simplification. Real-world figures will fluctuate.
Worked Example
A SaaS startup has $600,000 in the bank. Monthly expenses total $80,000 (salaries, hosting, rent, tools). Monthly recurring revenue is $20,000. Gross burn rate = $80,000/month. Net burn rate = $80,000 - $20,000 = $60,000/month. Runway = $600,000 / $60,000 = 10 months. At this rate, the company would exhaust its cash in approximately 10 months, suggesting the team needs to either increase revenue, reduce costs, or begin fundraising within the next few months to maintain a healthy buffer.