SaaS Burn Rate & Runway Calculator
Results Analysis
Monthly Gross Burn
$0
Monthly Net Burn
$0
Estimated Cash Runway
0 Months
Understanding SaaS Burn Rate and Runway
In the world of Software as a Service (SaaS), "Burn Rate" is one of the most critical health metrics. It represents the rate at which your company is spending its venture capital or cash reserves before reaching profitability or positive cash flow.
The Difference Between Gross Burn and Net Burn
Investors and founders often look at two different numbers to understand financial stability:
- Gross Burn: This is the total amount of cash your company spends every month on operating expenses (rent, salaries, AWS bills, marketing). It ignores revenue entirely.
- Net Burn: This is the actual amount of cash you are losing each month. It is calculated by taking your total expenses (Gross Burn) and subtracting your total revenue (MRR). If you are revenue-positive but not yet profitable, your Net Burn is what truly determines your runway.
How to Calculate Runway
The "Runway" is the number of months your business can survive before it runs out of cash. The formula is simple:
Real-World SaaS Example
Imagine a seed-stage startup with the following monthly figures:
- Cash in Bank: $300,000
- Monthly Revenue: $10,000
- Monthly Expenses: $35,000 (Salaries + Cloud + Marketing)
In this scenario, the Gross Burn is $35,000. However, because they are making $10,000 in revenue, their Net Burn is $25,000 per month. Their runway would be $300,000 divided by $25,000, which equals 12 months.
Why Your Runway Matters for Fundraising
Venture capitalists typically recommend having at least 18-24 months of runway after a funding round. This gives you roughly 12-18 months to hit your growth milestones and 6 months to actually close your next round of funding. If your runway drops below 6 months, you are in the "danger zone," and your leverage in investment negotiations decreases significantly.