Burn Rate Calculator
Calculate startup burn rate, runway in months, and model expense scenarios. Plan your fundraising timeline.
Runway
10.0 months
Cash Runway Timeline
Scenario Modeling
| Cut Expenses | New Net Burn | New Runway | Extension |
|---|---|---|---|
| 10% | $42,500/mo | 11.8 mo | +1.8 mo |
| 20% | $35,000/mo | 14.3 mo | +4.3 mo |
| 30% | $27,500/mo | 18.2 mo | +8.2 mo |
| 40% | $20,000/mo | 25.0 mo | +15.0 mo |
| 50% | $12,500/mo | 40.0 mo | +30.0 mo |
Fundraising Timeline
On Track
You have approximately 1.0 months before you need to start fundraising. Begin around Feb 2026 to maintain 6+ months runway.
Recommended: Start fundraising with 9-12 months of runway to negotiate from a position of strength.
💡Startup Insights
- •Fundraising Best Practice: The average startup raises their next round with 8-12 months of runway remaining. VCs prefer founders who plan ahead rather than those in desperation mode.
- •Rule of 40: For SaaS companies, growth rate + profit margin should exceed 40%. If you are burning cash, high growth can justify it.
- •Default Alive: At your current growth rate, will you become profitable before running out of cash? Paul Graham calls this the most important question for startups.
📚Historical Burn Rate Lessons
WeWork: The $5B Cautionary Tale
WeWork famously burned through over $5 billion before restructuring. Their net losses reached $1.9B in 2018 alone, leading to a failed IPO and massive valuation drop from $47B to under $10B.
Pets.com: Running on Empty
Despite raising $82.5M in their IPO, Pets.com lasted only 268 days before shutting down. They spent $11.8M on a Super Bowl ad while losing money on every order.
Amazon: Strategic Long-Term Burn
Amazon operated at a loss for years, burning cash to build infrastructure. Bezos famously said Your margin is my opportunity. Strategic burning with a path to profitability works.
Burn Rate Best Practices
- •18+ months runway: Ideal position for growth-stage startups
- •12+ months runway: Healthy for most venture-backed startups
- •6-12 months runway: Time to either raise or cut burn
- •<6 months runway: Emergency mode - act immediately
- •Track your burn rate weekly, not just monthly, for early warning signs
- •Create a worst-case scenario plan with 40% expense cuts mapped out
Related Calculators
About This Calculator
The Burn Rate Calculator helps startup founders determine how fast they're spending cash and how long their runway extends. Enter your monthly expenses, revenue, and cash balance to calculate gross burn, net burn, and runway in months. Understanding your burn rate is critical for timing fundraises, managing investor expectations, and ensuring your company survives to achieve product-market fit.
How to Use the Burn Rate Calculator
- 1Enter your total monthly operating expenses (salaries, rent, software, marketing, etc.).
- 2Enter your monthly revenue (if any) to calculate net burn.
- 3Input your current cash balance (bank account + liquid assets).
- 4View your gross burn rate, net burn rate, and runway in months.
- 5Use the runway figure to plan your next fundraise or path to profitability.
Formula
Runway (months) = Cash Balance / Monthly Net Burn RateRunway tells you how many months until you run out of cash at your current spending rate. Net burn accounts for revenue, giving you a more accurate picture than gross burn alone.
Gross Burn vs. Net Burn: Know the Difference
Gross Burn Rate: Total monthly operating expenses, regardless of revenue.
Formula: Gross Burn = Total Monthly Expenses
Net Burn Rate: Actual cash consumed per month after accounting for revenue.
Formula: Net Burn = Monthly Expenses - Monthly Revenue
Example:
- Monthly expenses: $150,000
- Monthly revenue: $50,000
- Gross burn: $150,000/month
- Net burn: $100,000/month
Why Both Matter:
- Gross burn shows your cost structure and operational scale
- Net burn shows actual cash consumption and true runway
- Investors ask about both—know your numbers cold
Common Mistake: Founders often quote gross burn when they should quote net burn (and vice versa). Always specify which you're discussing.
The Runway Formula: Your Survival Equation
Basic Runway Calculation: Runway (months) = Cash Balance / Monthly Net Burn Rate
Example:
- Cash in bank: $1,200,000
- Net burn: $100,000/month
- Runway: $1,200,000 / $100,000 = 12 months
Adjusted Runway (accounting for growth): If burn increases 10% monthly due to hiring:
- Month 1: $100K, Month 6: $177K, Month 12: $314K
- Naive runway: 12 months
- Realistic runway: ~8 months (due to increasing burn)
The "Zero Cash Date" Exercise: Plot your cash balance monthly, accounting for planned hiring and revenue growth. Find the exact date you hit zero. This is your true runway endpoint.
Runway Benchmarks:
| Stage | Minimum Runway | Ideal Runway |
|---|---|---|
| Pre-seed | 12 months | 18 months |
| Seed | 15 months | 24 months |
| Series A | 18 months | 24+ months |
| Series B+ | 24 months | 30+ months |
The 6-Month Rule: When to Start Fundraising
The Cardinal Rule: Start fundraising when you have 6+ months of runway remaining.
Why 6 Months?
- Average fundraise takes 3-6 months from first meeting to wire
- Add 1-2 months for unexpected delays
- Never negotiate from a position of desperation
The Fundraising Timeline:
| Runway Remaining | Action |
|---|---|
| 12+ months | Comfortable position, optimize for best terms |
| 9-12 months | Begin warm introductions, update materials |
| 6-9 months | Active fundraising mode |
| 3-6 months | Danger zone—close quickly or cut burn |
| <3 months | Emergency mode—bridge, revenue, or wind down |
The "Running on Fumes" Discount: Investors can smell desperation. Founders with <3 months runway often accept:
- 30-50% lower valuations
- Aggressive liquidation preferences
- Board control provisions
Better Strategy: Cut burn aggressively at 6 months to extend runway while raising. A 3-month extension could save 20% dilution.
Jar Insight: Lessons from the Dot-Com Crash
The Dot-Com Burn Rate Hall of Shame:
Pets.com (1998-2000):
- Raised: $82.5M IPO + $65M prior = ~$147M total
- Burned through it in: 9 months post-IPO
- Monthly burn: ~$16M at peak
- Lesson: Spending $1.20 to acquire customers worth $0.30 is not a strategy
Webvan (1999-2001):
- Raised: $800M+
- Built 26 massive distribution centers before proving unit economics
- Peak burn: $100M+/month
- Lesson: "Build it and they will come" killed the company
Kozmo.com (1998-2001):
- Free delivery of DVDs, snacks, Starbucks—anything under 1 hour
- Raised: $280M
- Unit economics: Lost money on every order
- Lesson: Negative gross margins + high burn = guaranteed death
The Pattern: All three had:
- Massive burn rates ($10M-$100M/month)
- Negative unit economics
- Growth-at-all-costs mentality
- No path to profitability
Modern Cautionary Tales (2020-2023):
- Fast (checkout startup): Raised $120M, burned through it in 12 months
- Hopin: Raised $1B+, laid off 60% of staff when growth slowed
- Better.com: Raised $900M, laid off 9,000 employees in multiple rounds
The Lesson: High burn is only justified when:
- Unit economics are positive (or have clear path to positive)
- Every dollar burned accelerates a defensible moat
- The market opportunity is truly winner-take-all
Healthy Burn Rate: What Investors Actually Want
The Burn Multiple Framework: Burn Multiple = Net Burn / Net New ARR
Interpretation:
| Burn Multiple | Rating | What It Means |
|---|---|---|
| <1x | Exceptional | Growing faster than burning |
| 1-1.5x | Great | Efficient growth |
| 1.5-2x | Good | Acceptable for early stage |
| 2-3x | Mediocre | Needs improvement |
| >3x | Poor | Burning cash inefficiently |
Example:
- Net burn: $500K/month ($6M/year)
- Net new ARR: $4M/year
- Burn multiple: $6M / $4M = 1.5x (Good)
Stage-Appropriate Burn:
| Stage | Typical Monthly Burn | Focus |
|---|---|---|
| Pre-seed | $20K-$50K | Product development |
| Seed | $50K-$150K | PMF validation |
| Series A | $150K-$500K | Scaling what works |
| Series B | $500K-$2M | Market expansion |
| Series C+ | $2M-$10M+ | Category dominance |
The "Efficient Growth" Era (2022+): After the 2021 funding peak, investors shifted from "growth at all costs" to "efficient growth." Startups are now expected to:
- Show path to profitability
- Maintain burn multiples under 2x
- Demonstrate capital efficiency
- Have 24+ months runway post-funding
Extending Runway Without Killing Growth
The Runway Extension Toolkit:
1. Revenue Acceleration (Best Option)
- Raise prices 10-20% (most startups underprice)
- Add annual prepay discounts (improves cash flow)
- Launch premium tier
- Reduce churn (1% churn reduction = months of runway)
2. Smart Cost Cuts (Preserve Core)
- Pause non-essential hiring (biggest expense)
- Renegotiate software contracts (ask for startup discounts)
- Sublease excess office space
- Cut underperforming marketing channels
3. Cash Flow Optimization
- Collect receivables faster (net 30 → net 15)
- Negotiate longer payables with vendors
- Prepay annual contracts for discounts
4. Non-Dilutive Capital
- Revenue-based financing
- Venture debt (if you have recent equity round)
- Government grants (SBIR, R&D credits)
- Customer prepayments/LOIs
What NOT to Cut:
- Core engineering team
- Customer success (churn kills runway faster)
- Sales team that's producing
- Critical infrastructure
The 20% Rule: If you need to cut, cut 20% once rather than 5% four times. Repeated small cuts destroy morale and create uncertainty.
2026 Startup Funding Environment
Current Funding Landscape:
| Stage | Median Raise (2026) | Median Valuation | Time to Close |
|---|---|---|---|
| Pre-seed | $500K-$1M | $3-5M | 2-3 months |
| Seed | $2-4M | $10-15M | 3-5 months |
| Series A | $10-15M | $40-60M | 4-6 months |
| Series B | $25-50M | $100-200M | 4-8 months |
Investor Expectations in 2026:
- Profitability path: Must show clear route to breakeven
- Efficient growth: Burn multiple under 2x expected
- 18+ month runway: Post-funding runway requirement
- Real metrics: Revenue, not just user growth
- AI narrative: How AI enhances your product/ops
Sectors Receiving Funding:
- AI/ML applications (70%+ of deals include AI)
- Climate tech and sustainability
- Healthcare/biotech
- Defense and security tech
- Developer tools and infrastructure
Sectors Facing Headwinds:
- Pure consumer social apps
- Crypto/Web3 (recovering slowly)
- Meal delivery (unit economics challenged)
- Quick commerce
- EdTech (post-pandemic normalization)
Burn Rate by Business Model
SaaS Burn Patterns:
- Front-loaded: High R&D spend before revenue
- Sales & marketing intensive at scale
- Target: 70-80% gross margins offset burn
- Typical runway need: 24 months
| SaaS Stage | Monthly Burn | Focus Area |
|---|---|---|
| MVP | $20-50K | Product development |
| Pre-PMF | $50-100K | Customer discovery |
| Post-PMF | $100-300K | Sales & success |
| Scale | $300K-1M | Growth & expansion |
Marketplace Burn Patterns:
- Supply acquisition first (chicken-and-egg)
- Subsidies to balance supply/demand
- Target: Positive unit economics at scale
- Typical runway need: 36+ months
Hardware/Deep Tech Burn:
- Longest time to revenue
- Highest capital requirements
- Manufacturing scale-up costly
- Typical runway need: 48+ months
Services/Agency Burn:
- Lower burn, slower scale
- Revenue from day one possible
- People costs dominate
- Typical runway need: 12-18 months
Red Flags and Warning Signs
Burn Rate Red Flags:
| Warning Sign | What It Means | Action Required |
|---|---|---|
| Burn increasing faster than revenue | Inefficient scaling | Review unit economics |
| Burn multiple >3x | Spending too much for growth | Cut non-essential spend |
| Runway <6 months without funding | Emergency zone | Immediate cuts or bridge |
| Revenue declining while burn stable | Churn or market issues | Product/market reassessment |
| CAC > LTV | Unsustainable economics | Pause growth spending |
The "Vanity Burn" Trap: Some founders wear high burn as a badge of honor—"We raised $50M and are burning $3M/month." This is dangerous thinking. High burn only makes sense when:
- Each dollar creates defensible value
- Unit economics are positive or improving
- Market is truly winner-take-all
- You have clear path to profitability
Questions Investors Will Ask:
- What is your burn multiple?
- What is your path to default alive?
- What happens if you cannot raise?
- Which 20% of spend drives 80% of results?
- Can you reach profitability with current cash?
The "Default Alive" Test: Can you reach profitability before running out of cash if growth continues at current trajectory? If yes, you are "default alive." If no, you are "default dead" and dependent on raising more money.
Cash Management Best Practices
Treasury Management for Startups:
Where to Keep Cash:
| Option | Yield (2026) | Risk | Access |
|---|---|---|---|
| Business checking | 0.01% | FDIC insured | Immediate |
| HYSA (business) | 4-5% | FDIC insured | 1-2 days |
| Money market | 4.5-5.5% | FDIC insured | 1-2 days |
| Treasury bills | 4-5% | Government backed | Maturity date |
| Sweep accounts | 4-5% | Varies | Automatic |
The Ladder Strategy: Split cash across maturities to balance yield and access:
- 25% in checking (operating needs)
- 25% in HYSA (short-term flexibility)
- 25% in 3-month treasuries
- 25% in 6-month treasuries
Cash Flow Forecasting:
- Build 13-week rolling cash flow model
- Update weekly with actual vs. forecast
- Flag when actuals deviate >10%
- Model scenarios: base, upside, downside
SVB Lessons (2023):
- Never keep more than $250K in single bank (FDIC limit)
- Spread deposits across 3-4 institutions
- Understand your bank's stability
- Have backup banking relationships ready
Pro Tips
- 💡Know both your gross burn and net burn—investors will ask about each.
- 💡Update your runway calculation monthly, accounting for actual spend vs. budget.
- 💡Start fundraising with 6+ months runway remaining; never negotiate from desperation.
- 💡Track burn multiple (Net Burn / Net New ARR) as your efficiency metric.
- 💡Cut once and cut deep (20%) rather than multiple small cuts that destroy morale.
- 💡Raising prices is often the fastest way to extend runway without cutting anything.
- 💡Venture debt can extend runway 3-6 months but requires recent equity funding.
- 💡Include a 10-20% buffer in burn projections—unexpected costs always arise.
- 💡Revenue retention improvements compound; 1% less churn can add months of runway.
- 💡Document your path to profitability even if it is years away—investors want to see the plan.
Frequently Asked Questions
It depends on stage and funding. Pre-seed: $20K-$50K/month. Seed: $50K-$150K/month. Series A: $150K-$500K/month. More important than absolute burn is your burn multiple (Net Burn / Net New ARR). Under 1.5x is great, under 2x is acceptable, over 3x signals inefficiency.
