Calculate startup runway, burn rate, and when you need to raise or reach profitability.
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Runway = Cash / Net monthly burn. Net burn = Monthly expenses - Monthly revenue. Break-even month = log(expenses/revenue) / log(1 + monthly growth rate). Default alive = break-even before cash runs out.
Runway (months) = Cash on Hand ÷ Net Burn Rate. Net burn = Monthly Expenses - Monthly Revenue. $500K cash at $50K/month net burn = 10 months runway.
Always aim for 18-24 months. This gives time to hit milestones and raise the next round without desperation. Below 12 months: raise immediately or cut burn.
Gross burn: total monthly spend. Net burn: spend minus revenue. Aim for net burn that gives 18+ months runway. VCs watch burn multiple: burn ÷ net new ARR.
Start raising when you have 12-18 months of runway left. Fundraising takes 3-9 months. Never raise when desperate — leverage disappears below 6 months runway.
Cut non-essential spend, delay non-critical hires, reduce founder salaries, negotiate vendor deferred payments, increase revenue (best option), use revenue-based financing.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.