For any early-stage company or startup, cash is oxygen. Understanding your Burn Rate—the speed at which you are spending your cash reserves—is critical for survival. It determines your runway, or how much time you have left to either become profitable or raise another round of funding.
This calculator allows you to compute both your Gross Burn (total spending) and Net Burn (spending minus revenue), and provides an immediate estimate of your cash runway.
$
Total cash currently in the bank.
$
Salaries, rent, server costs, marketing, etc.
$
Enter 0 if pre-revenue.
Gross Burn Rate:–
Net Burn Rate:–
Estimated Cash Runway
0Months
function calculateStartupRunway() {
// Get input values
var currentCash = parseFloat(document.getElementById('currentCash').value);
var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
var monthlyRevenue = parseFloat(document.getElementById('monthlyRevenue').value);
// Validation
if (isNaN(currentCash) || isNaN(monthlyExpenses) || isNaN(monthlyRevenue)) {
alert("Please enter valid numbers for all fields.");
return;
}
if (currentCash < 0 || monthlyExpenses < 0 || monthlyRevenue < 0) {
alert("Values cannot be negative.");
return;
}
// Calculations
// Gross Burn is simply the total expenses
var grossBurn = monthlyExpenses;
// Net Burn is Expenses minus Revenue
var netBurn = monthlyExpenses – monthlyRevenue;
// Runway is Cash / Net Burn
var runway = 0;
var runwayText = "";
var statusHtml = "";
var isProfitable = false;
if (netBurn <= 0) {
// Company is profitable or breaking even
isProfitable = true;
runwayText = "∞";
statusHtml = '
Great news! You are Default Alive (Profitable or Break-even). You are not burning cash.
';
} else {
// Company is burning cash
runway = currentCash / netBurn;
// Round to 1 decimal place
runwayText = runway.toFixed(1);
if (runway < 6) {
statusHtml = '
Critical Alert: You have less than 6 months of runway. Immediate action required to cut costs or raise funds.
';
} else if (runway < 12) {
statusHtml = '
Warning: You have less than 12 months of runway. You should begin fundraising or adjusting spend soon.
';
} else {
statusHtml = '
Healthy Runway: You have over 12 months of runway. Maintain focus on growth and product market fit.
There are two types of burn rates that founders must distinguish between:
1. Gross Burn Rate
This is the total amount of money your company spends each month on operating expenses. It includes salaries, rent, software subscriptions, legal fees, and marketing costs. It essentially asks, "How much money is leaving the bank account?"
2. Net Burn Rate
This is the more crucial metric for calculating runway. It accounts for any income you are generating. It is calculated as:
Net Burn = Monthly Operating Expenses – Monthly Revenue
How to Calculate Cash Runway
Your runway is the amount of time (usually measured in months) your startup can survive before it runs out of money, assuming your income and expenses stay constant.
Runway (Months) = Current Cash Balance / Net Burn Rate
Real World Example
Imagine a seed-stage startup with the following financials:
Cash in Bank: $500,000
Monthly Expenses (Gross Burn): $60,000
Monthly Revenue: $10,000
First, calculate the Net Burn:
$60,000 (Expenses) – $10,000 (Revenue) = $50,000 Net Burn
Next, calculate the Runway:
$500,000 / $50,000 = 10 Months
This startup has 10 months to either become profitable, lower expenses, or raise additional venture capital.
Why is Burn Rate Important?
Investors look at burn rate to assess the efficiency and risk level of a startup. A high burn rate relative to growth can be a red flag. Conversely, a high burn rate is acceptable if it correlates with massive growth (often called "blitzscaling"), provided there is ample capital available.
Typically, seed-stage investors prefer to see a runway of 12 to 18 months following a funding round. This gives the founding team enough time to hit key milestones required for the Series A round without the distraction of constant fundraising.