How do I calculate my startup's runway?

Runway is cash in the bank divided by net monthly burn, where net burn is your monthly cash out minus your monthly cash in. If you have 200,000 in the bank and burn 20,000 net per month, you have ten months of runway. Build it as a month-by-month model rather than a single division so you can see how the number changes as revenue grows or costs shift.

What is a healthy amount of runway to keep?

A common target is 18 to 24 months after a raise, and you should start seriously working on the next raise or on cutting burn well before you hit six months. Fundraising takes longer than founders expect, and raising with under a few months of runway puts you in the weakest possible negotiating position.

What is the difference between gross burn and net burn?

Gross burn is your total monthly cash outflow — everything you spend. Net burn is that minus the cash coming in from revenue. Net burn is what actually determines runway, but watch gross burn too, because if your revenue dips, your net burn jumps back toward your gross burn overnight.

Runway Math: The Burn Model Every Founder Needs

Money is the one problem that ends a startup outright. You can survive a bad product, a wrong hire, or a slow quarter — but you cannot survive running out of cash. The strange thing is how many founders manage that risk by feel, carrying a vague sense of “we’re fine for a while” instead of a model they can actually query. This is how to build the simple version in an hour, so the scariest number in the business becomes something you can reason about.

Runway is a model, not a number

Ask most founders their runway and you get a single figure: “about eight months.” That number is nearly useless, because it is a snapshot of one set of assumptions that are already changing. Revenue grows. A hire starts. An annual bill lands. The real question is not “how much runway do I have today” but “how does my runway change as things move” — and that is a model, not a division.

The good news: the model is small. At its heart are three quantities.

Cash in the bank — what you actually have, today.
Net burn — cash out minus cash in, per month.
Runway — cash divided by net burn, tracked month over month.

Everything else is refinement layered on that spine.

Build the spine in one sheet

Open a spreadsheet. Make one column per month for the next 18 to 24 months. Then build these rows:

Starting cash — this month’s opening bank balance.
Cash in — revenue you will actually collect this month. Be conservative; model cash when it lands, not when it is “closed.”
Cash out — every outflow: salaries, contractors, software, rent, taxes, the annual invoices that hit in lumps. Put the lumps in the month they are paid, not smoothed away.
Net burn — cash out minus cash in.
Ending cash — starting cash minus net burn. This becomes next month’s starting cash.

Now the row that matters appears on its own: the first month where ending cash goes negative is the month you run out. Everything before it is your runway. Because it is a model, you can now change one input — delay a hire, land a customer, cut a tool — and watch the empty-month move. That is the entire point.

A runway number tells you where the cliff is. A runway model tells you which of your decisions moves it.

Model three futures, not one

A single forecast is a prediction, and predictions are wrong. Instead, build three columns of assumptions and flip between them:

Base case — what you genuinely expect. Realistic revenue, planned hires, known costs.
Slow case — revenue grows slower and a deal or two slips. This is not pessimism; it is the version that quietly happens to most startups. If the slow case runs out of road too soon, you have a problem to solve now, while you have options.
Good case — things go right. Useful mostly to see whether success creates its own cash crunch, because growth often costs money before it makes money.

When a bad month arrives — and it will — it stops being a crisis. It is just the slow case showing up, and you already know what it does to your runway because you modeled it.

Decide your trigger before you need it

The most valuable thing the model gives you is the ability to decide, calmly and in advance, what you will do at each level of runway. Panic decisions at two months of cash are almost always worse than deliberate decisions at nine.

Set your triggers now:

Comfortable — plenty of road. Focus entirely on the milestone that unlocks your next raise or profitability.
Act soon — around six months of runway, start the raise or begin trimming burn in earnest. Fundraising takes longer than you think, and cuts take a month to show up in cash.
Act now — a hard floor, a few months out, where you will reduce burn to extend runway no matter what, because being alive and smaller beats being dead and right.

Write these down. Reviewing them monthly turns money from a background anxiety into a scheduled decision.

The one-hour habit that saves companies

Update the model once a month, on the same day, when you reconcile your actual bank balance against what you forecast. Two things happen. Your assumptions get sharper, because reality corrects them. And you never get surprised, because you are watching the empty-month drift toward or away from you in real time.

That is the whole discipline. An hour to build it, a few minutes a month to keep it honest, and the number that can end your company becomes the number you understand best.