Runway is the number of months your company can operate before it runs out of cash. It is the single number that decides when you have to fundraise, cut costs or reach profitability, and it is the first thing a serious investor will ask about.
A simple runway estimate divides cash by monthly burn. That works for a company with flat costs and no revenue, but most startups have neither. Revenue grows, hiring plans push expenses up, and the gap between them changes every month. This calculator models that gap month by month for up to ten years.
How to use it
How it’s calculated
Each month, the calculator subtracts expenses from revenue to get net burn, then subtracts net burn from your cash balance. Revenue and expenses then grow by the rates you entered. When the balance would fall below zero, it calculates the fraction of the final month that cash still covers.
If revenue catches up with expenses before cash runs out, the company is “default alive”: it can reach profitability without raising again, assuming the growth rates hold. The bar chart turns coral in the months after your recommended fundraising start date.
Worked example
A Toronto software company has $900,000 in the bank, spends $85,000 a month and brings in $20,000 in monthly revenue. Net burn is $65,000, so a simple estimate gives just under 14 months.
With revenue growing 4% a month and expenses growing 1%, the two effects roughly cancel in the first year, so runway stays close to 14 months. Allowing six months to close a round, the founders need to start fundraising within about eight months.
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Frequently asked questions
What is the difference between gross burn and net burn?
Gross burn is total monthly spending. Net burn is spending minus revenue. Runway is based on net burn, because revenue offsets part of what you spend.
How much runway should a startup have?
Many investors and founders aim for 18 to 24 months after a round closes. That leaves about a year to hit the milestones for the next round, plus six months to raise it.
What does default alive mean?
The term, popularised by Y Combinator’s Paul Graham, describes a company that will reach profitability on its current cash and growth path. A default dead company needs new funding to survive.
Should I include government grants and tax credits?
Only include money that has arrived or is contractually committed. SR&ED refunds and grants often arrive months after you apply, so model them separately as a future cash injection.
How often should I update my runway?
Monthly, after you close your books. Recalculate sooner after any change to headcount, pricing or a large contract, since each one moves the cash-out date.
This tool gives estimates for planning and comparison. It is not legal, tax or investment advice. Confirm numbers with your lawyer, accountant or financial advisor before you sign anything. Inputs stay in your browser and are not stored.