Runway is how long your cash lasts. The arithmetic is trivial — cash divided by burn — and the standard version is wrong for most companies, because it assumes next month looks exactly like this one for the next two years.
Calculator
Runway calculator
How many months of cash you have left. Add growth rates and it projects forward month by month instead of assuming this month repeats forever — which is where the flat calculation quietly misleads.
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The basic calculation
Runway (months) = Cash on hand ÷ Average monthly net burn
Net burn, not gross. Use an average across several months, not a single month.
Hold $600,000 and burn $50,000 a month and you have twelve months. That is the number an investor will do in their head, which is reason enough to know it.
Why the flat calculation misleads
The flat version assumes revenue and costs are frozen. Neither is. A company growing revenue 8% a month while costs grow 3% has meaningfully more runway than the flat number says — burn shrinks every month and eventually inverts. A company whose costs are growing faster than revenue has considerably less, and the flat calculation will not warn them.
That is why the calculator above projects forward month by month with growth applied, and shows both figures. The flat one is what other people will calculate. The projected one is what will actually happen.
How much runway is enough?
Enough to reach a milestone that changes your position, plus the time it takes to raise against it. Raising takes three to six months of a founder’s full attention, so under six months of runway means you are already late.
The widely repeated "keep 18 months" comes from real data: Radicle Labs’ analysis of Crunchbase financing put the median gap between rounds at 18 months, and roughly 20 months from Series A to Series B. If you hold ten months and the typical gap to your next round is twenty, that gap is the thing your plan has to answer for.
For a bootstrapped or profitable business the logic differs — the target is a cash reserve, not a bridge to a round. Three to six months of operating expenses is the usual advice, more if revenue is seasonal or concentrated in a handful of customers.
The four ways to extend runway
- 1Increase revenue. The only lever that does not shrink the company, and the slowest — which is why it is rarely the whole answer once runway is already short.
- 2Cut costs. The fastest lever, and the one with a floor: you cannot cut your way to a business. Cut deep once rather than shallow three times. Repeated small cuts destroy morale and buy less time than a single decisive one.
- 3Collect faster. The most overlooked. Money you have earned but not collected is runway sitting in someone else’s bank account. Tightening terms and chasing receivables costs nothing and works immediately.
- 4Raise more. The obvious one, and the one that gets harder exactly as it becomes more urgent. Runway is the leverage you raise with, which is why you raise before you need to.
Frequently asked questions
How do you calculate runway?
Divide cash on hand by average monthly net burn. If cash is $600,000 and net burn is $50,000, runway is 12 months. For a more accurate answer, project month by month with expected revenue and cost growth — which is what the calculator above does.
How many months of runway should a startup have?
Eighteen months is the common target, and it comes from real data — the median gap between funding rounds is about 18 months. The logic underneath is that you need enough time to hit a milestone plus three to six months to raise against it.
Does runway include money I am owed?
No. Runway is spendable cash. Receivables are not cash until collected, and treating them as though they were is one of the most common ways a company is surprised by its own bank balance.
What if my business is profitable?
Then runway is not a constraint in the same way — you are adding cash rather than consuming it. What matters instead is your cash reserve against a downturn, and your cash conversion cycle. Profitable businesses still fail when customers pay slower than staff do.
Should I use gross burn or net burn for runway?
Net burn, because that is what your balance actually falls by. It is worth also calculating runway on gross burn as a downside case — that tells you how long you would last if revenue stopped entirely.
How often should I recalculate runway?
Monthly, as soon as the month closes. Runway moves faster than people expect, and the moment it becomes urgent is well after the moment it became a problem.