Startup runway is the number of months your company can operate before it runs out of cash, calculated as current cash balance divided by net monthly burn rate. If you hold $600,000 and burn a net $50,000 per month, you have 12 months of runway. This article documents the exact methodology behind Growth Turbine's free runway calculator.
Runway is the single most important number in any fundraising conversation, because it sets your deadline. Yet founders calculate it inconsistently — some use gross burn, some forget one-time expenses, some count committed-but-unspent cash. Below is precisely how we define each input so the output is honest.
The runway formula
The core formula our runway calculator uses is:
Runway (months) = Current Cash ÷ Net Monthly Burn
Two inputs, but each has rules. Get the definitions wrong and the result flatters you — which is exactly what you don't want when you're timing a raise.
How we define "current cash"
Current cash is liquid, unrestricted cash you can actually spend: money in operating and savings accounts. We deliberately exclude:
- Restricted cash — security deposits, collateral, or funds contractually earmarked.
- Accounts receivable — money owed to you is not cash until it lands.
- Undrawn credit lines — available debt is optionality, not runway.
- Committed-but-unreceived investment — a signed SAFE is not cash until the wire clears.
Gross burn vs. net burn (and why we use net)
This is where most runway estimates go wrong. The two figures answer different questions.
| Metric | Definition | Use it for |
|---|---|---|
| Gross burn | Total monthly cash out (all operating expenses) | Understanding your cost base |
| Net burn | Gross burn minus monthly cash revenue | Calculating true runway |
We use net burn for runway because revenue genuinely extends your timeline. A company with $80,000 of gross burn and $30,000 of monthly revenue has a net burn of $50,000 — and 20% more runway than its gross burn would suggest.
Pro tip: Calculate net burn on a trailing 3-month average, not a single month. One large invoice or one big customer payment can distort a single month and give you a false sense of security or panic.
Why we exclude one-time items
Runway should reflect your recurring cash consumption. We normalize out one-time events — a legal bill for incorporation, a single equipment purchase, a one-off deposit — because including them makes your burn look lumpy and your runway unpredictable. We model those separately as discrete cash events.
A worked example
Consider a seed-stage SaaS company:
- Cash in bank: $600,000
- Gross monthly burn: $75,000
- Monthly recurring revenue collected: $25,000
- Net monthly burn: $50,000
Runway = $600,000 ÷ $50,000 = 12 months. If that company is planning a raise, it should start the process no later than month 5 or 6, because raising capital typically takes 3 to 6 months and you never want to negotiate from a position of 6 weeks of cash.
How runway should shape your fundraising timeline
Runway isn't just a survival metric — it's a planning tool. We tell founders to begin investor acquisition while they still have 6+ months of runway, so they can raise on their terms rather than under duress. If your runway is tight, the Reg-D 506(c) path to accredited investors is often faster than a public retail raise. Pair this calculator with our valuation calculator and investor ROI calculator to model the full picture.
Frequently Asked Questions
How do you calculate startup runway?
Divide your current liquid cash balance by your net monthly burn rate. Net burn is gross monthly expenses minus monthly cash revenue. For example, $600,000 in cash divided by $50,000 net burn equals 12 months of runway.
Should runway use gross burn or net burn?
Use net burn. Net burn subtracts the cash revenue you collect each month from your total expenses, which gives a true picture of how fast your cash is actually declining. Gross burn overstates how quickly you will run out of money.
What counts as "cash" in a runway calculation?
Only liquid, unrestricted cash you can spend immediately — operating and savings account balances. Exclude accounts receivable, undrawn credit lines, restricted cash, and investment that has been committed but not yet received.
When should I start fundraising based on my runway?
Begin the fundraising process while you still have at least 6 months of runway, because raising typically takes 3 to 6 months. Starting early lets you negotiate from strength rather than desperation.
What is a healthy amount of runway?
Most investors want to see that a raise provides 18 to 24 months of runway. That window gives a company enough time to hit the milestones needed to justify the next round's valuation.
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