What is burn rate and how do I calculate it?

Burn rate is the speed at which your startup spends cash each month. Formula: Monthly Burn Rate = Total Monthly Operating Expenses - Monthly Revenue. Example: If you spend $100,000/month and earn $10,000/month, your burn rate is $90,000/month. This tells you how fast you're running out of cash and how much runway you have before needing profitability or funding.

What is startup runway and why does it matter?

Runway is the number of months your startup can operate before running out of cash. Formula: Runway = Current Cash Balance / Monthly Burn Rate. Example: $500,000 / $50,000 burn = 10 months of runway. Runway determines your urgency to reach profitability or raise funding. 18+ months is comfortable; under 6 months is crisis mode.

How much runway should a startup have?

Runway benchmarks by stage: Seed stage should have 12-18 months. Series A should have 18-24 months. Series B+ should have 24+ months. General rule: Start fundraising conversations when you have 12-18 months of runway. If you wait until 6 months, you're negotiating from weakness. Investors expect you to have 'air cover' to execute strategy, not beg for cash.

What's the fastest way to extend runway?

Three approaches: (1) Reduce burn rate (cut costs) - this is fastest, extending runway immediately. (2) Increase revenue - accelerates path to profitability but requires product-market fit. (3) Raise capital - expensive (3-5% dilution) but gives you time. Most successful startups do all three: cut unnecessary costs, grow revenue aggressively, then raise efficiently when metrics support it.

What should I include in burn rate calculation?

Total burn = salaries + benefits + cloud infrastructure + SaaS tools + office costs + contractor payments + marketing spend + everything else. Many founders forget: AWS/cloud ($10K-50K/month), SaaS tools ($5K-20K), benefits (25-30% of salaries), and contractor payments. Calculate conservatively - it's better to overestimate burn and be pleasantly surprised than underestimate and run out of cash.

How do I model my path to profitability?

Three scenarios: (1) Current path: continue at today's burn and revenue growth, see when you break even. (2) Cost-cutting: reduce burn by 10-20%, see how much runway you gain. (3) Growth acceleration: increase revenue growth, see if you reach profitability before cash runs out. Use this calculator to model all three and make data-driven decisions on funding, hiring, and expansion.

Free GTM Tools / Burn Rate Calculator

✦ Free startup calculator

Burn Rate Calculator for founders & CFOs

Calculate your monthly cash burn, remaining runway, break-even timeline, and survival scenarios. Essential for fundraising, cash planning, and profitability roadmaps.

What this calculator shows

Burn rate is the most critical metric for startup survival. Know exactly how many months of cash you have left and what you need to do to break even.

RunwayMonths of cash remaining

Burn RateMonthly cash burn

Break-EvenTimeline to profitability

ScenariosGrowth and cost-cut models

Inputs

Enter your cash position and burn assumptions. The calculator updates instantly.

Current cash balance ($)Total cash in bank right now

Monthly cash burn ($)Total monthly operating expenses

Monthly revenue ($)Monthly revenue (if any)

Monthly growth rate (%)Expected MoM revenue growth %

Potential monthly cost cuts ($)Maximum cuts possible if needed

Expected funding ($)Planned fundraising (if any)

Results

Your runway and survival scenarios based on your assumptions.

Current Runway

0 mo

Months until cash runs out

Net Monthly Burn

Burn minus revenue

Cash to Break-Even

Amount needed to become profitable

Months to Break-Even

0 mo

If revenue grows at target rate

Survival score0/100

Enter your assumptions to see your runway and survival scenarios.

What is burn rate and why does it matter?

Burn rate is the speed at which your startup spends cash each month. It's calculated as total monthly operating expenses minus monthly revenue. For early-stage startups without revenue, burn rate equals total monthly spend.

Formula: Burn Rate = Monthly Operating Expenses - Monthly Revenue

Example: If you spend $100,000/month in salaries, infrastructure, and operations, and earn $10,000/month in revenue, your burn rate is $90,000/month. With $450,000 in the bank, you have 5 months of runway.

Burn rate is the #1 metric that determines startup survival. It tells you how long you have to reach profitability, get to your next fundraising round, or pivot to a sustainable model.

Understanding runway: the most critical startup metric

Runway is the number of months your startup can operate before running out of cash. It's calculated by dividing your current cash by your monthly burn rate.

Formula: Runway (months) = Current Cash / Monthly Burn Rate

Example: $500,000 cash ÷ $50,000 monthly burn = 10 months of runway

18+ months of runway: Comfortable. You can take time to optimize and grow.
12–18 months of runway: Healthy for fundraising. You have time to raise next round.
9–12 months of runway: Active fundraising needed. Start conversations with investors now.
6–9 months of runway: Urgent. You need funding or profitability ASAP.
Under 6 months of runway: Crisis mode. Cut costs immediately or pivot.

Burn rate benchmarks by stage

Company Stage	Typical Runway	Monthly Burn	Funding Action
Idea / MVP	12-18 months	$5K-$20K	Bootstrapped or friends/family
Pre-Seed / Seed	12-18 months	$20K-$50K	Seed round ($500K-$2M)
Series A	18-24 months	$50K-$150K	Series A ($2M-$10M)
Series B+	24+ months	$150K-$1M+	Series B/C ($10M+)
Profitable	Infinite	$0 (revenue > costs)	Self-sustaining

Note: Burn rate varies by company stage, geography, team size, and business model. Use this calculator to benchmark your specific situation.

Three strategies to extend runway

Reduce burn rate (cut costs): This is the fastest way to extend runway. Reducing monthly burn by $10K immediately extends runway by months. Focus on: sales salaries (biggest expense), cloud infrastructure (often wasted), office costs (remote-first saves 20%+).
Increase revenue: Faster growth means profitability sooner. If you grow revenue 20% MoM instead of 10%, you reach break-even 6+ months earlier. But this requires product-market fit and customer acquisition.
Raise capital: The obvious play, but expensive (3-5% dilution per round) and time-consuming (3-6 months). Only raise if growth justifies the dilution and runway is healthy enough to negotiate.

Common burn rate mistakes startups make

Miscalculating burn rate: Many founders forget to include costs like cloud infrastructure, contractor payments, SaaS tools, and benefits. True burn is higher than salary alone.
Runway math errors: Forgetting that revenue reduces burn. A $50K monthly burn with $10K revenue is actually $40K net burn, extending runway by 25%.
Ignoring seasonal revenue swings: If your revenue is volatile (ups and downs), calculate runway conservatively. Use your LOWEST revenue month, not average.
Assuming linear growth: Early startups don't grow linearly. Be pessimistic in your runway calculations. If you assume 10% growth but get 5%, you run out of money faster than expected.
Waiting too long to fundraise: Start investor conversations when you have 12-18 months of runway, not when you have 6 months. Fundraising takes 3-6 months.
Burning to look impressive: High burn doesn't equal smart spending. Investors prefer unit economics and path to profitability, not just growth at all costs.

Plan your path to profitability

Not sure how to extend your runway? Let's model cost-cutting scenarios, revenue growth projections, and fundraising strategy to get you to profitability.

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