Runway is how many months your company can operate on the cash it has today. For SaaS and AI startups, where compute and payroll grow alongside revenue, it is the number investors and boards ask about first.
Free tool
Cash runway calculator
See your monthly net burn, how many months of cash you have left and the month you would run out, with growth built in.
A simple projection that assumes steady monthly growth; real runway depends on collections timing, one-off costs and financing. Results are estimates for general information only, not legal, tax or financial advice. Confirm them with your own CPA, tax adviser or attorney before making decisions. Using this tool does not create a client relationship with Catching Numbers Inc.
What is the cash runway formula?
The basic cash runway formula is:
Cash runway (months) = cash balance ÷ monthly net burn rate
where net burn rate = monthly cash spent − monthly cash received from customers. Gross burn rate is the cash spent alone, before revenue. The calculator above goes one step further and adjusts burn month by month for the growth rates you enter: if revenue grows faster than costs, burn shrinks and runway extends; if compute or hiring grows faster, it shortens.
How do you calculate cash runway? A worked example
- Start with cash. Take the cash in your bank accounts at month end: say $1,200,000.
- Work out gross burn. Average monthly cash out over the last three months, including payroll, rent, software and compute: say $150,000.
- Subtract cash in. Average monthly cash collected from customers: say $50,000. Net burn is $150,000 − $50,000 = $100,000 a month.
- Divide. $1,200,000 ÷ $100,000 = 12 months of runway, with no change in revenue or costs.
Use a three-month average rather than a single month, leave out one-off items such as an annual insurance payment or a fundraising inflow, and use cash figures rather than accrual revenue: an annual contract billed upfront is cash today even though the revenue is recognized over the year.
How do you calculate burn rate?
Burn rate is the speed at which you spend cash, and there are two versions:
- Gross burn rate = total cash spent in the month, on payroll, rent, software, compute and everything else.
- Net burn rate = gross burn − cash collected from customers in the month.
Runway uses net burn. In the example above, gross burn is $150,000 and net burn is $100,000. The quickest way to get both is from your bank statements or a cash flow statement for the last three months, which is why runway is only as good as your books.
Ways to extend your runway
- Collect receivables faster and move annual customers to upfront billing
- Use cloud and AI credits fully and review compute commitments every quarter
- Match hiring to revenue milestones, not calendar dates
- Track gross margin monthly so model and hosting costs don’t quietly erode it
- Keep a 13-week cash forecast so there are no surprises
Frequently asked questions
How much runway should a startup have?
Many founders aim for 18 to 24 months after a raise, and start raising again with at least 6 to 9 months left, because fundraising usually takes longer than planned.
What is the difference between gross burn and net burn?
Gross burn is total cash spent each month. Net burn is gross burn minus the cash your customers pay you. Runway is based on net burn.
Can you build a cash forecast for us?
Yes. Our fractional CFO service includes 13-week cash forecasts, budgets and runway scenarios, built on books we close every month.
Should cash runway be calculated with cash or accrual numbers?
Cash. Runway is about when the bank account runs out, so use cash actually received and paid. Accrual revenue and expenses are better for judging profitability, but they can make runway look longer or shorter than it is.
How often should I recalculate my runway?
Every month, as soon as the books are closed, and again whenever something big changes, such as a large hire, a new contract or a price increase. A runway number based on books that are months behind is a guess.
Should runway include an unused credit line or venture debt?
Show it both ways. Calculate runway on the cash you have, then a second number that includes credit you can actually draw. Lenders can change terms, so boards usually focus on the cash-only figure.
What tools help manage cash runway?
Three things do most of the work: books closed every month so the inputs are right, a 13-week cash forecast for the near term, and a runway calculator like the one above for the longer view. Your accounting software’s cash flow report gives you the burn figures to start with.
How does revenue growth change my runway?
Growing revenue lowers net burn each month, so runway gets longer than the simple formula suggests, while growing costs do the opposite. Enter growth rates in the calculator above to see your month-by-month burn and a more realistic cash-out date.
What is burn multiple?
Burn multiple is net burn divided by net new annual recurring revenue (ARR) over the same period. It shows how much cash you spend to add each dollar of ARR, and a lower number means more efficient growth.
Is runway the same as the cash-out date?
They answer the same question in two ways. Runway is the number of months your cash will last; the cash-out date is the month you would actually run out. The calculator above shows both.
Get a runway number you can put in front of investors
We close your books every month and build the forecast on top of them.