Runway: the number that governs everything
Runway is how many months your company can operate before the cash runs out. The basic formula is runway = cash ÷ monthly burn, where burn is expenses minus revenue. It's the most important number for any pre-profit startup because it dictates your deadline: raise more money, reach profitability, or wind down — all before runway hits zero.
Burn rate, gross vs net
Gross burn is total monthly spend; net burn is spend minus revenue — the true rate your bank balance falls. A company spending $45,000 with $15,000 of revenue has a net burn of $30,000; with $200,000 in the bank, that's a flat runway of about 6.7 months. Revenue growth extends this, which is why the calculator also simulates growing revenue toward break-even.
The 18-month rule of thumb
- Raise for ~18 months. A common target is enough cash to run 18 months: roughly 12 to hit the next milestone and 6 to raise the next round. Under ~6 months of runway, you're in the danger zone where fundraising leverage collapses.
- Growth changes the math. If revenue is climbing fast enough to reach break-even before cash runs out, you may never need another raise — the ideal outcome. If not, you're racing a clock.
- Cutting burn buys time asymmetrically. Reducing burn extends runway immediately and permanently; it's usually faster and more certain than hoping revenue spikes.
Watch the trend, not just the number
Track runway monthly. A stable or lengthening runway means growth is outpacing spend; a shrinking one is an early warning long before the crisis. Pair this with a break-even analysis to know exactly how much revenue turns the burn positive.