Burn Rate Calculator
By Jan Suski. I go deep on every review, checking every number against its source and digging up details other coverage misses, a habit from six years of SEO and link building for tech companies. Bylines at Surfer, Brand24, and Senuto. How the scoring works.
How it works
Enter your current cash balance, total monthly expenses, monthly revenue, and how fast revenue grows each month. The burn rate calculator subtracts revenue from expenses to get your monthly net burn rate, divides total cash by net burn to calculate runway in months, then projects month by month to show if the cash balance reaches zero before revenue overtakes costs. Change any field and every result updates.
Who it's for
Built for founders working out how much startup runway is left before the next round, finance leads updating a pitch deck or data room while actively fundraising, and investors checking a company's financial health from its cash flow statement. It doubles as a runway calculator, since the same three numbers answer both questions, and the growth field adds Paul Graham's default alive test on top.
Reading the results
Gross burn is the total amount the company spends in a month. Net burn, or net monthly burn rate, is expenses minus revenue, the amount the bank account shrinks by. Runway is cash divided by your current burn rate with revenue held flat. The second row applies your revenue growth: if revenue passes expenses before the cash hits zero, the company is default alive.
When to use it
- Setting fundraising timing, so you start fundraising with months to spare.
- Testing how a hiring plan or a 10% cost cut changes months of runway.
- Checking if current revenue growth gets you cash flow positive without more funding.
- Updating the monthly burn figure existing investors expect in a board update.
Gross burn rate
$0
per month
Net burn rate
$0
expenses minus revenue
Runway
0 months
revenue held flat
Runway with growth
0 months
Cash hits zero
–
at the growth rate above
Default alive?
–
Runway after an expense cut
| Cut monthly expenses by | Net burn | Runway (flat revenue) |
|---|---|---|
| % | $0 | 0 |
| % | $0 | 0 |
| % | $0 | 0 |
The formula
Net burn rate = Monthly expenses − Monthly revenue
Runway (months) = Current cash balance ÷ Net burn rate
Runway with growth: each month, revenue × (1 + growth rate), expenses flat, net cash deducted from the balance, until cash reaches zero or revenue passes expenses (projection capped at 120 months)
Default alive means revenue overtakes expenses before the cash runs out, the test Paul Graham set out in October 2015 with expenses held constant and revenue growth held at its recent rate.
The projection holds expenses flat and applies one growth rate to every month, and it ignores one-off costs, annual prepayments and debt repayments. Before acting on it, check three things: the cash figure against your bank account today, the expense figure against the last three months of your cash flow statement, and the growth rate against actual month-over-month revenue for the last six months.
How this is calculatedgross burn, net burn, runway, default alive
Gross burn rate is total monthly cash expenses: payroll, rent, software, contractors, everything the company spends. Net burn rate is expenses minus revenue, the figure that decides how long the money lasts. Wall Street Prep's burn rate guide uses the same two definitions of cash burn rate and the same simple formula for runway: cash balance divided by burn rate. The monthly burn rate investors ask about is usually the net figure.
That formula assumes revenue stays flat, and the growth field removes the assumption. To calculate startup runway with growth, the calculator starts from your current cash, then steps forward one month at a time: revenue grows by the rate you entered, expenses stay put, and the month's net cash comes off the balance. It stops when the cash balance reaches zero or when revenue passes expenses and the company turns cash flow positive.
The second stopping point is Paul Graham's test from “Default Alive or Default Dead?”, published October 2015: assuming expenses remain constant and revenue growth is what it has been over the last several months, does the company reach profitability on the money it has left? If yes, it's default alive. If the cash hits zero first, it's default dead, and it needs investor funding or a cost cut to continue operating.
Worked example$1.2M cash, $150,000 expenses, $50,000 revenue
A start-up holds $1,200,000 in the bank, spends $150,000 a month, and collects $50,000 a month in revenue. Gross burn is $150,000, net burn is $100,000, and runway is 12 months on the flat formula. Cut expenses 10% and net burn drops to $85,000, which stretches runway to 14.1 months.
Now add 5% monthly revenue growth. Net burn shrinks every month, and runway stretches to 15.6 months, but revenue wouldn't pass expenses until month 24, so the cash runs out first. At 5% growth the company is default dead. Raise growth to 6% and revenue passes expenses in month 20 with about $38,000 left in the bank account: default alive, by a hair's breadth.
- Gross burn rate: $150,000 a month
- Net burn rate: $100,000 a month
- Runway, flat revenue: 12 months
- Runway at 5% monthly growth: 15.6 months (default dead)
- At 6% monthly growth: cash flow positive in month 20 (default alive)
What this does and doesn't tell youone-off months, cash access, fundraising timing
A runway number is only as good as the month behind it. A month that includes an annual insurance premium, or one large customer paying a year up front, distorts cash burn for that month. Average the last three months of operating expenses from the cash flow statement before you trust one figure, and don't bury your head in the sand if the average comes out higher than the single month you hoped to use.
Cash in the bank is an assumption too. The FDIC insures deposits to at least $250,000 per depositor, per ownership category, at each insured bank. When Silicon Valley Bank failed on 10 March 2023, start-ups with uninsured cash reserves there couldn't count on reaching them until regulators guaranteed all deposits two days later. Count cash above the FDIC insured limit at one bank as cash at risk.
How much runway is enough depends on how long the next round takes. Carta's March 2025 data put the median gap between a seed round and a Series A at 774 days in Q4 2024, about 25 months, and 732 days from Series A to Series B. The 12 to 18 months repeated across runway calculator pages leaves little room against a gap that long.
Wall Street Prep notes start-ups tend to begin raising once runway drops to about five to eight months. A stitch in time saves nine: work backwards from the round, adding the months a raise takes to the months you want in reserve, and that sum marks the latest point to start fundraising. The dilution calculator shows what the next round costs in ownership.
How do you calculate burn rate and runway?
Add up every dollar that left the bank account last month: that total amount is gross burn. Subtract the month's revenue to get net burn, the expenses minus revenue figure. Divide your current cash balance by net burn and you get the number of months of cash runway left. With $600,000 in the bank and a current burn rate of $50,000 a month, runway is 12 months. The burn rate calculator above does the same and adds a growth projection on top.
What is a good cash runway?
Enough to reach the next round with months to spare. With Carta's median seed-to-Series A gap at 774 days, a seed company holding 12 months of cash runway has to raise again well before the median company does. Start-ups planning on 24 months or more give themselves that room. Under six months, a company running out of cash negotiates its next round with its back against the wall, and the cash reserves on its balance sheet tell investors how little time it has.
What is a good burn rate?
A good burn rate is one your cash and revenue growth can carry, since burn only means something next to both. A general rule: the burn is fine if the runway it produces outlasts the time to the next round with months to spare. Under six months of runway remaining, the company is in a race against time, and decision making on every hire and every contract should run through the cash runway it leaves.
How can I reduce a high burn rate?
A lower cash burn rate starts with the costs that don't move revenue, usually software seats, contractors and office space, and payroll comes last since it's the largest line and the slowest to rebuild.
The other lever is to increase revenue and accelerate revenue: focus the sales team on deals that close this quarter, give the pipeline a revenue focus over logos, or offer annual prepayment discounts. A customer paying 12 months up front puts a year of cash in the bank today, which extends cash runway even though the monthly net burn you report stays the same.
How do I calculate burn rate in Excel?
Put cash in B1, monthly expenses in B2 and monthly revenue in B3. Net burn is =B2-B3, and runway in months is =B1/(B2-B3). For the growth projection, build one row per month: revenue grows by the prior row × (1 + growth rate), net cash is revenue minus expenses, and a running cash column tracks cash burn down to the month it turns negative.
Should investor funding count as revenue?
Leave it out. Burn rate measures operations, so equity raised, loans and interest income stay out of the revenue line. Add new investor funding or venture capital to the cash balance on the day it lands, which extends runway without changing the burn. Mixing the two makes a start-up running out of cash look cash flow positive for the month the wire arrives, and it understates the monthly burn figure the pitch deck reports.
Is this free tool accurate enough for a board deck?
The arithmetic is exact, and the inputs decide the rest. For a board deck or data room, feed it a three-month average from the cash flow statement, keep an eye on where the growth rate comes from, and show the flat and growth runways side by side so the board sees both cases.
Pair it with the Rule of 40 calculator once the company is large enough for growth and profit to be judged together, and use both for strategic planning, informed decisions about when to raise, and tracking financial health month to month.
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