Gross burn, net burn and runway
Gross burn is total monthly spending. Net burn subtracts revenue, and is what actually drains the bank account. With 500,000 in the bank, 60,000 going out and 20,000 coming in, net burn is 40,000 and runway is twelve and a half months.
Growing revenue shortens the effective burn even at flat expenses, which is why the runway figure from a static calculation is conservative for a growing company and optimistic for a shrinking one.
How much runway is enough
The conventional wisdom is to raise when you have plenty of runway, not when you need it: fundraising typically takes three to six months, and negotiating leverage evaporates as the balance approaches zero. Most advisors suggest starting a raise with at least nine months left.
Between raises, 18 to 24 months of runway is the common target, enough to hit meaningful milestones before the next round rather than raising on the same story.
Frequently asked questions
What is the difference between gross and net burn?
Gross burn is total monthly expenses. Net burn is expenses minus revenue, the amount your bank balance actually falls each month. Runway uses net burn.
When should I start fundraising?
With at least six to nine months of runway left, since raises commonly take three to six months and desperation is visible in negotiations.
Should runway include committed future revenue?
Be conservative: count only revenue that reliably recurs. Signed contracts not yet paying belong in the pitch, not the runway math.
What if my burn varies month to month?
Use a trailing three-month average for both expenses and revenue to smooth lumpy items like annual subscriptions or one-off invoices.
How do I extend runway?
Cut expenses, grow revenue, or raise capital. Expense cuts act immediately; revenue growth compounds; both together are what usually rescues a short runway.
Is default alive a real thing?
The question is whether current growth reaches profitability before cash runs out. If yes, you are default alive and fundraise from strength. This calculator's static runway is the starting point for that analysis.