Burn Rate Calculator
Monthly burn, runway in months, and what it takes to extend it.
At current net burn
Estimates for planning only, not financial advice.
Burn rate is the speed at which your company spends more than it earns, and runway is how many months that pace lasts before the cash runs out. The math is simple: $500,000 in the bank divided by $40,000 of monthly net burn equals 12.5 months. The discipline is in the inputs. Use real cash movement, not accounting profit, and count only money you can actually spend. This calculator turns those inputs into runway, the burn multiple efficiency score, and the exact monthly cut needed to reach your target runway.
How to Use This Calculator
Enter cash you can spend today: bank balances plus drawable credit, never promised revenue. Enter total monthly cash out (payroll, rent, vendors, everything) and monthly cash actually collected, not invoiced. The difference is your net burn. Set a target runway, 18 months is the classic post-raise goal, and add net new ARR per month if you want the burn multiple. Update it monthly; a single snapshot lies, but the trend tells the truth.
Enter spendable cash and this month\'s real cash out and cash in. Use bank movements, not the P&L.
Read net burn and runway. If runway is under 9 months, fundraising or cuts should already be in motion.
Check the burn multiple and the required burn for your target runway. That required number is your budget ceiling, work backward from it to the headcount and spend plan.
The Runway Formulas
Net burn is the only burn number that touches runway, because revenue offsets spending dollar for dollar in the bank account. The burn multiple adds the efficiency lens: burning $40,000 a month while adding $20,000 of monthly new ARR is a 2.0 multiple, acceptable during aggressive growth, while the same burn adding $5,000 of ARR is an 8.0, which means growth is far too expensive. Investors look at both together: runway says how long you survive, burn multiple says whether the spending is working.
Worked Example
A SaaS startup holds $500,000 in cash, spends $160,000 a month, and collects $120,000, so net burn is $40,000 and runway is 12.5 months. It adds $20,000 of net new ARR monthly, giving a burn multiple of 2.0: reasonable, not great. The founders want 18 months of runway to reach their Series A milestones. Required burn is $500,000 / 18 = $27,778 a month, meaning they must cut net burn by $12,222 monthly, about 30 percent. That is roughly one senior hire plus discretionary spend, or equivalently about $147,000 in additional annual collections. Now the board conversation has real numbers instead of vibes.
Runway Zones and What Each Means
| Runway | Zone | Action |
|---|---|---|
| 18+ months | Comfortable | Invest in growth, monitor monthly |
| 12 to 18 months | Healthy | Plan fundraise timing, hit milestones |
| 6 to 12 months | Watch closely | Start raise conversations or cut plan now |
| 3 to 6 months | Danger | Active fundraise or immediate cuts |
| Under 3 months | Critical | Emergency bridge, deep cuts, or wind-down plan |
The zones assume fundraising takes 3 to 6 months, which it does even in good markets. Starting a raise with 9 months of runway gives you two full quarters to close; starting with 4 gives investors the upper hand and you ulcers. One more discipline: recompute runway every month with fresh numbers. Runway that shrinks by more than one month per month means burn is accelerating, usually headcount added faster than revenue, and it is the earliest warning your finance stack gives you. For the broader picture, our business budget planner builds the monthly plan behind these numbers, and our net worth calculator tracks what the founders actually keep.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is burn rate?
Burn rate is how fast a company spends more cash than it brings in, usually measured monthly. Gross burn is total monthly cash out; net burn is cash out minus cash in, and net burn is the number that sets your runway. A startup spending $200,000 a month and collecting $120,000 has a net burn of $80,000, which is what actually drains the bank account.
How do you calculate startup runway?
Divide cash on hand by monthly net burn. With $500,000 in the bank and $40,000 of net burn a month, runway is 12.5 months. That is the calendar date the money runs out if nothing changes. Founders usually start fundraising with 6 to 9 months of runway left, because raising takes 3 to 6 months and you never want to negotiate with an empty tank.
What is gross burn vs net burn?
Gross burn is everything going out the door each month: payroll, rent, servers, marketing. Net burn subtracts revenue coming in. Early startups with little revenue track gross burn; once revenue is meaningful, net burn drives the runway math. Watch both: revenue can mask a gross burn problem, and a sudden revenue dip turns a comfortable net burn into a crisis overnight.
What is the burn multiple and what is a good one?
Burn multiple is net burn divided by net new ARR (annual recurring revenue added). It answers "how many dollars do we burn to add one dollar of recurring revenue." Below 1 is excellent, 1 to 2 is good, 2 to 3 is acceptable in heavy investment phases, and above 3 means growth is too expensive. It is the efficiency companion to runway: runway says how long, burn multiple says how well.
How much runway should a startup have?
Twelve to 18 months after a fundraise is the standard target, enough to hit the milestones that justify the next round. Below 6 months is the danger zone where fundraising becomes desperate. Above 24 months can mean you raised too much or are under-investing in growth, though capital efficiency is back in fashion and leaner is more acceptable than it was in 2021.
How can we extend runway without raising money?
Three levers: cut gross burn (usually headcount and discretionary spend, the painful one), grow revenue faster, or collect cash sooner through annual prepay discounts and tighter payment terms. This calculator shows the required cut directly: to stretch 12 months of runway to 18, monthly net burn must fall by a third. Annual plans at a 15 to 20 percent discount often pull forward enough cash to buy a quarter.
Does runway include the current month?
Convention varies, so state your assumption. Most founders compute runway as cash divided by burn starting next month, effectively excluding money already committed this month. The difference is small at 12-plus months and meaningful under 6. Pick one method, use it every month, and track the trend: runway shrinking faster than calendar time means burn is accelerating.
Should I include committed but unspent money?
Include cash in the bank plus committed, undrawn facilities you can actually tap, like an open credit line. Do not include "likely" revenue, verbal funding commitments, or receivables you cannot collect quickly. Runway math should be conservative, because the cost of being wrong is existential. When in doubt, count only cleared cash.
What is a good burn rate for a seed startup?
There is no universal number; it scales with stage and market. A rough frame: seed startups often burn $50,000 to $150,000 a month, Series A $200,000 to $500,000. The better question is burn relative to milestones: can this spend level reach the traction needed for the next round within the runway it buys? A $100,000 monthly burn is fine with 18 months of cash and a clear path to Series A metrics, and fatal with 5 months and no plan.
How does hiring change the burn math?
Headcount is usually 60 to 80 percent of burn, and each hire costs more than salary: benefits, taxes, equipment, and recruiting run 1.25 to 1.4 times base pay in the US. A $120,000 engineer really burns about $12,500 to $14,000 a month. Before approving headcount, divide the fully loaded monthly cost into current runway and look at the new date honestly.