The short answer
Runway is cash in bank divided by average monthly net burn, where net burn is cash spent minus cash collected. Use a three-month average, then build a month-by-month model that includes planned hires and revenue growth, because simple runway often overstates how long cash lasts. Start preparing your raise well before the safety margin.
- Simple runway = cash in bank ÷ average monthly net burn.
- Use cash collected, not invoiced revenue.
- A month-by-month model with planned hires is more honest than simple runway.
- Work backwards from the cash-out month, minus a safety margin and the length of a raise.
- Report cash, net burn and runway in every investor update.
How to use this calculator
Runway is how many months your company can operate before the bank account hits zero. It's the number that sets your fundraising calendar: when you need to start raising, how much to raise, and how much risk you can take. This worksheet gives you the formulas, a month-by-month spreadsheet layout and a worked example. Fill in your own numbers where marked "input" and update it monthly.
Investors will ask for your runway in almost every meeting, and they'll want to see it in your monthly updates (investor update template). See also runway and burn rate.
The core formulas
Gross burn = total cash spent in a month (salaries, rent, software, contractors, everything)
Net burn = gross burn − cash collected from customers that month
Simple runway (months) = cash in bank ÷ average monthly net burn (last three months)
Use cash, not accounting revenue. A customer invoice that hasn't been paid doesn't extend your runway. Average net burn over three months to smooth out annual payments and one-off costs.
Quick runway table
| Cash in bank (input) | Monthly net burn (input) | Simple runway |
|---|---|---|
| $300,000 | $25,000 | 12 months |
| $500,000 | $25,000 | 20 months |
| $750,000 | $40,000 | 18.75 months |
| $1,000,000 | $50,000 | 20 months |
| $1,500,000 | $90,000 | 16.7 months |
| $2,500,000 | $125,000 | 20 months |
Month-by-month spreadsheet layout
Simple runway assumes burn stays flat. It rarely does: you'll hire, and revenue will grow. A month-by-month model is more honest. Set up one column per month and these rows:
| Row | Label | Formula or input |
|---|---|---|
| 1 | Starting cash | Month 1: your bank balance (input). Later months: previous month's ending cash |
| 2 | Cash collected from customers | Input, or last month × (1 + growth rate) |
| 3 | Payroll and benefits | Sum of salaries by start month from your hiring plan |
| 4 | Other operating costs | Rent, software, marketing, contractors, legal, insurance |
| 5 | Gross burn | = row 3 + row 4 |
| 6 | Net burn | = row 5 − row 2 |
| 7 | New funding received | Input in the month money actually arrives |
| 8 | Ending cash | = row 1 − row 6 + row 7 |
Your runway is the month where ending cash first falls below zero. Add a conditional format that highlights ending cash under three months of burn, the point where you're in trouble if you haven't already closed a round.
Worked example
Hypothetical example. A company has $800,000 in the bank, spends $55,000 a month and collects $10,000 a month from customers, with collections growing 3% a month. It plans to hire two engineers in month 4 at a combined fully loaded $24,000 a month.
- Month 1 net burn: $55,000 − $10,000 = $45,000. Simple runway: $800,000 ÷ $45,000 ≈ 17.8 months.
- From month 4, gross burn rises to $79,000, while collections have grown to about $10,900 ($10,000 × 1.03³). Net burn: about $68,100.
- Collections keep growing, but not fast enough to offset the hires: the month-by-month model shows cash running out during month 14, about four months sooner than simple runway suggests.
Four months is roughly the time it takes to run a fundraising process. That's why the month-by-month version matters.
When to start raising
Work backwards from the month cash runs out:
- Subtract a safety margin of at least three to six months; raising with little cash left weakens your position.
- Subtract the length of a raise: preparation plus meetings plus closing, often three to six months for pre-seed and seed (fundraising timeline).
- The result is the month to start preparing. Many founders with 18 months of runway begin preparing around month 9 to 12.
Ways to extend runway
- Collect faster: annual prepayment discounts, shorter invoice terms.
- Delay hires until a milestone triggers them, and write the trigger down.
- Add non-dilutive money: grants, competitions, tax credits (non-dilutive funding).
- Cut tools and services nobody used last month.
- Raise a small bridge from existing investors early, while you still have leverage (bridge round).
Monthly runway checklist
- Reconcile cash to the bank statement.
- Update collections and costs; recompute three-month average net burn.
- Update the month-by-month model with any hiring changes.
- Report cash, net burn and runway in your investor update.
- Check your raise start date against the model.
Frequently asked questions
How do you calculate startup runway?
Divide cash in the bank by average monthly net burn, which is cash spent minus cash collected from customers. A month-by-month model that includes hires and growth gives a more accurate answer.
What's the difference between gross and net burn?
Gross burn is total monthly spending. Net burn subtracts cash collected from customers. Runway uses net burn.
How much runway should a startup have?
Many founders aim for 18–24 months after a round, and start preparing the next raise with plenty of runway left.
When should I start fundraising?
Work back from the month cash runs out: subtract a safety margin of several months and the time a raise takes, often three to six months.