How to calculate your startup's runway (and when to start raising)
The runway formula, gross vs. net burn, and why you should start fundraising with 9 months of cash left.
Runway is how long the company survives on the cash it has today if nothing changes. It is the first question every investor asks and a founder's main job: don't run out of money.
The basic formula
Runway = cash in the bank ÷ monthly net burn.
Net burn is what goes out minus what comes in: total costs (payroll, cost of revenue, marketing, software, rent) minus the month's revenue. With $1.2M in the bank and $100K of net burn per month, runway is 12 months.
Why the simple formula misleads
Burn doesn't stand still. Payroll grows with every hire, marketing grows as you push, and revenue — if things go well — grows too. Real runway is calculated month by month: revenue growing, costs growing, cash falling, until the month it goes negative.
When to start raising
A round usually takes 3 to 6 months from the first meeting to money in the bank. The rule of thumb is to start raising with at least 9 months of runway. With less than that, you negotiate in a hurry and accept worse terms.
What to track alongside it
- Net burn over the last 3 months, not a single month.
- Break-even: the month revenue starts covering costs.
- Burn multiple: how much you burn for every dollar of new recurring revenue.
In the exkmo Finance runway calculator you enter cash, revenue, growth and costs, add planned funding, and see the exact month your cash hits zero.