Burn Rate Calculator
Determine how quickly your startup is spending cash and how long your current funding will last. Enter your cash balance and monthly expenses to calculate your gross burn rate, net burn rate, and remaining runway in months.
Burn rate is the most important single metric for early-stage startup management. It measures how quickly a company is spending cash reserves before reaching profitability or raising additional funding. Two flavors matter: **gross burn** (total monthly expenses, regardless of revenue) and **net burn** (expenses minus revenue — the actual rate of cash depletion). Net burn is typically what investors and operators reference, because it determines runway — the months of operation possible before cash runs out.
The runway-burn-fundraising dance defines startup operations. Most startups raise capital based on a milestone (e.g., "we have 18 months runway to reach $5M ARR and Series A metrics"). Each month, cash declines as the team grows, product develops, and customers acquire. Revenue grows (hopefully) toward the milestone target. The race: reach the milestone (justifying next-round valuation) before running out of cash. Burn rate decisions — hiring, marketing spend, infrastructure investment — directly trade off runway vs. growth rate. Going too lean preserves cash but slows growth; spending aggressively accelerates growth but shortens runway.
This calculator models gross burn, net burn, and runway projection accounting for revenue and expense growth over time. Use it for: weekly/monthly runway monitoring (critical for any startup), fundraising timing decisions (typically start fundraising at 8-9 months runway since fundraising takes 4-6 months), hiring and spend decisions (does this commitment fit within runway?), and scenario planning (what if revenue stalls or new round delays?). Critical context: runway projections assume current growth/expense trends continue. Real life produces surprises — major customer wins/losses, hiring delays, market shifts. Maintain enough runway buffer (12-18 months target for early-stage startups) to absorb unexpected challenges without forcing desperate decisions.
Inputs
Results
Net Burn Rate
$60,000
/month
Runway
9 months
Gross Burn Rate
$80,000
/month
Breakeven
Month 20
Cash Balance Projection
Revenue vs Expenses
Monthly Projection
| Month | Revenue | Expenses | Net Burn | Cash Balance |
|---|---|---|---|---|
| 1 | $20,000.00 | $80,000.00 | $60,000.00 | $440,000.00 |
| 2 | $22,000.00 | $81,600.00 | $59,600.00 | $380,400.00 |
| 3 | $24,200.00 | $83,232.00 | $59,032.00 | $321,368.00 |
| 4 | $26,620.00 | $84,896.64 | $58,276.64 | $263,091.36 |
| 5 | $29,282.00 | $86,594.57 | $57,312.57 | $205,778.79 |
| 6 | $32,210.20 | $88,326.46 | $56,116.26 | $149,662.52 |
| 7 | $35,431.22 | $90,092.99 | $54,661.77 | $95,000.75 |
| 8 | $38,974.34 | $91,894.85 | $52,920.51 | $42,080.24 |
| 9 | $42,871.78 | $93,732.75 | $50,860.97 | $-8,780.74 |
| 10 | $47,158.95 | $95,607.41 | $48,448.45 | $-57,229.19 |
| 11 | $51,874.85 | $97,519.55 | $45,644.70 | $-102,873.89 |
| 12 | $57,062.33 | $99,469.94 | $42,407.61 | $-145,281.50 |
Formula
How to use this calculator
- Enter current cash balance.
- Enter current monthly revenue.
- Enter current monthly expenses.
- Enter expected monthly revenue growth rate (be honest — actual growth often falls below projection).
- Enter expected monthly expense growth rate (typically 1-3% as you hire and scale operations).
- Review gross burn rate (total expenses) and net burn rate (expenses minus revenue).
- Review runway projection. For startups: 12-18 months is healthy; below 9 months requires active fundraising or burn reduction.
- Stress test: model lower revenue growth (50% of projection) and higher expense growth. Real life often produces these conditions.
- For fundraising planning: start raising at 8-9 months runway (raises take 4-6 months).
- For burn reduction: model hiring freeze, vendor renegotiations, or marketing spend cuts. Calculate runway extension impact.
- Update at least monthly. Cash position changes; revenue and expense trends shift. Quarterly review minimum; monthly preferred.
Worked examples
Seed-stage startup with normal trajectory
$1.5M seed round closed. $20K monthly revenue, $130K monthly expenses (team of 8). 10% monthly revenue growth, 2% monthly expense growth. Gross burn: $130K/month Net burn: $110K/month Simple runway: $1.5M / $110K = 13.6 months With growth: revenue compounds while expenses grow slowly. Real runway ~15-16 months. Healthy trajectory. Team can build toward Series A metrics ($1-3M ARR typical) within runway. Start preparing Series A materials around month 7-8; actively fundraising month 9-12. If revenue stalls at $20K (no growth): runway = $1.5M / $110K = 13.6 months. Tight but workable with prompt fundraising start.
Late-stage startup needing efficiency
$5M cash, $200K monthly revenue, $700K monthly expenses (team of 35), 8% monthly revenue growth, 4% monthly expense growth. Gross burn: $700K/month Net burn: $500K/month Simple runway: $5M / $500K = 10 months Burn multiple: $500K / ($200K growing 8% = $16K new ARR per month → $192K new ARR/year) → Burn multiple ~31. WAY too high. Concerning. Burning capital faster than revenue is growing. Either burn must decrease or growth must dramatically accelerate. Options: 1. Reduce headcount to lower burn (paint freeze on hiring, layoffs to extend runway). 2. Massive growth push to improve burn multiple (risky — may accelerate cash burn). 3. Bridge round at unfavorable valuation (signal of distress). Realistic path: layoffs to reduce burn to ~$300K/month, extend runway to 12+ months, refocus on capital-efficient growth before next round.
Profitable bootstrapped business
$200K cash reserve, $80K monthly revenue, $60K monthly expenses, 5% monthly revenue growth, 2% monthly expense growth. Gross burn: $60K/month Net burn: −$20K/month (NEGATIVE — generating cash, not burning) Cash growing: $20K/month accumulating in reserves. Runway: infinite (cash positive) Healthy bootstrapped business. Can choose between: scaling more aggressively (invest profits in growth), accumulating reserves (build cash buffer), or owner distributions. No fundraising pressure since cash flow is positive. The aspirational endpoint for any startup: revenue exceeds expenses, cash grows, business operates indefinitely without dilutive fundraising. Many "default alive" startups achieve this without external capital and prefer it to VC-backed paths.
When to use this calculator
Use this calculator for startup financial monitoring, runway projections, fundraising timing decisions, hiring/spend planning, or stress-testing financial scenarios.
Pair with cash-flow (broader financial planning) and break-even (path to profitability modeling).
Important burn rate considerations:
1. **Net burn is the operational metric.** Gross burn is "how much we spend"; net burn is "how much we lose." For runway and survival, net burn matters more.
2. **Runway is your most important metric.** For pre-profitability startups, "how many months of cash do we have" should be tracked weekly. Everything else flows from this.
3. **Fundraising takes 4-6 months.** Plan accordingly — start raising at 8-9 months runway minimum. Waiting until 4-6 months puts you in weak negotiating position.
4. **Burn multiple measures capital efficiency.** Net Burn / Net New ARR. Under 1.5x is excellent; 2-3x acceptable; over 5x concerning. Modern SaaS investors heavily weight burn multiple in valuation.
5. **Hiring is the biggest burn decision.** Each hire adds $80K-$300K+ annual cost (salary + benefits + tools + overhead). Hire only when growth justifies sustained burn increase.
6. **Stress test with conservative assumptions.** Real revenue growth typically lags projections. Build runway with 50-70% of projected revenue and 110-130% of projected expenses.
7. **"Default alive" vs. "default dead".** Paul Graham's framework: "Default alive" = if growth and burn continued at current trajectory, the company becomes profitable before running out of cash. "Default dead" = doesn't. Know which you are.
8. **Burn reduction is faster than revenue growth.** Cutting $50K/month burn extends runway immediately. Growing revenue $50K/month takes time. When runway tight, reduce burn before banking on growth.
9. **Don't over-optimize for runway.** Excessive frugality slows growth and signals weakness. Healthy growth-stage startups burn meaningful capital to build market position. Match burn to opportunity and capability.
10. **Lay off proactively if needed.** Painful but necessary. Companies that delay layoffs often face deeper cuts later from weaker positions. Better to right-size early than crisis-manage later.
11. **Burn discipline differentiates winners.** Capital-efficient growth (low burn multiple) produces better outcomes than "growth at all costs." Modern fundraising environment rewards efficiency.
12. **Bridge rounds signal distress.** Raising from existing investors between regular rounds typically signals milestones missed. Usually unfavorable terms. Avoid by planning fundraising with adequate buffer.
Common mistakes to avoid
- Tracking gross burn instead of net burn. Net burn determines runway; gross burn is just spending.
- Waiting too long to start fundraising. Fundraising takes 4-6 months — start at 8-9 months runway.
- Over-optimistic revenue projections. Build runway with conservative assumptions; real growth often lags.
- Over-hiring before product-market fit. Each hire adds $100K+ annual burn; only hire when growth requires.
- Ignoring burn multiple. Capital efficiency matters as much as growth rate for fundraising and survival.
- Refusing to consider layoffs. Painful but often necessary; delaying makes deeper cuts inevitable.
Frequently Asked Questions
Sources & further reading
- Startup Financial Management — U.S. Small Business Administration
- Startup Resources & Education — Y Combinator
- Startup Capital Efficiency Research — Ewing Marion Kauffman Foundation