Practical guide
How to calculate startup runway from cash and net burn
Calculate startup cash runway with a worked example, reserve adjustment, and the limits of a constant-burn estimate.
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How many months of runway does a startup have?
Cash runway equals available cash divided by monthly net cash burn. Use money the business can actually spend and a burn figure measured over the same operating scope. The result is a planning estimate, not a predicted failure date.
A cash runway calculation example
Consider an illustrative company with $480,000 available and $40,000 of monthly net burn. Its constant-burn runway is 480,000 ÷ 40,000 = 12 months. If $60,000 must remain untouched for existing obligations, planning cash becomes $420,000 and runway falls to 10.5 months.
Enter the adjusted cash balance and net burn into the calculator. Keep a separate note explaining the reserve so the next person reviewing the estimate does not silently add it back. Do not subtract the same obligation both from available cash and from the future burn schedule.
Choose the right denominator
Gross expenses alone give a different answer. If expenses are $70,000 and operating cash receipts are $30,000, net burn is $40,000. Dividing by $70,000 would measure how long cash lasts without those receipts. That can be a useful downside scenario, but label it as such.
Use an average only when the included months represent the next period. A month containing an annual software renewal might overstate recurring burn, while a month before a planned hiring wave may understate it. Keep both the observed average and the expected forward estimate visible.
Questions founders ask
Does fundraising count as revenue?
Keep a financing inflow separate from operating receipts. Add cleared funding to the cash balance; do not treat it as recurring revenue that reduces every future month’s burn.
What does zero burn mean?
There is no finite cash-divided-by-burn answer when burn is zero. This tool displays zero in that case; it does not certify zero runway or permanently unlimited cash. Use a month-by-month forecast if spending and collections change.
Use the runway calculator to reproduce the scenario with your own inputs.