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Burn rate calculator: how long have we got?
A burn rate calculator for startups. Gross and net burn, runway, and the month the cash runs out, then the question that matters more: with revenue growing as it is, do you reach profitability first? If not, it says what growth would get you there, and when to start raising.
Put in your numbers and press the button. Everything runs in your browser and nothing is stored.
What this leaves out
Timing. It treats revenue as cash in the month it's earned, and spend as steady, so it doesn't see a customer who pays in 60 days, an annual tool bill, or GST that comes back later. If your months are lumpy, the bank-balance mode is the honest one. It also doesn't know about money promised but not in the bank: a raise isn't runway until it lands.
The growth rates are your assumptions, and a projection is only as good as them. Startup growth doesn't compound neatly for years, so read the far end of the chart as a direction, not a date. For what a salary costs by the hour, which is most of a burn, there's the salary to hourly calculator.
What burn rate is
Burn rate is how fast a company spends its cash. Gross burn is everything that leaves the bank in a month: salaries, rent, tools, ads. Net burn is gross burn less the cash that comes in. Net burn is the one that decides how long the money lasts.
With ₹50 lakh in the bank, ₹8 lakh a month going out and ₹3 lakh coming in, gross burn is ₹8 lakh and net burn is ₹5 lakh.
How to calculate runway
Divide the cash in the bank by the net burn. ₹50 lakh over ₹5 lakh a month is 10 months, so on today's numbers the money runs out at the end of the tenth month.
If your months are lumpy, work from the bank instead: take the balance three months ago, subtract today's, and divide by three. Leave out any month with a fundraise or a loan in it. It's the quickest honest number, because the bank doesn't count invoices that haven't been paid.
Default alive or default dead
Paul Graham's essay of October 2015 asks one question: with expenses as they are and revenue growing at its recent rate, does the company reach profitability on the money it has left? If it does, it's default alive. If not, it's default dead, and it survives only by raising or cutting.
Take the same company and grow its revenue 10% a month with spend flat. Revenue overtakes spend in month 12, with ₹17.6 lakh still in the bank: default alive. At 0% growth it's default dead in 10 months, and the line between the two is about 6.2% a month. The calculator finds that rate for your numbers. Graham's advice is to ask the question earlier than feels necessary.
The burn multiple
David Sacks's burn multiple, from April 2020, is net burn divided by net new annual recurring revenue: how much is burned for each unit of new ARR. At ₹3 lakh of monthly recurring revenue growing 10% a month, the month adds ₹30,000 of MRR, or ₹3.6 lakh of ARR, for ₹5 lakh of burn: a multiple of about 1.4.
Lower is better. Sacks called a multiple of 2 reasonable for an early-stage startup and 5 terrible. It only means something when revenue recurs, so the calculator shows it only if you say yours does.
How much runway to raise for
Geoff Ralston's guide to seed fundraising for Y Combinator, from 2016, says the ideal is to raise enough to reach profitability and never raise again. Failing that, raise enough to reach a milestone that makes the company fundable, which he puts about 12 to 18 months away. Runway is what buys that time, which is why the date the cash runs out matters less than the date you have to start raising.
Raising takes months, and a short runway weakens your hand in every conversation. Choose how many months you want left when you start, and the calculator puts a date on it.
Questions people actually ask
answered properly,
not padded out
What is burn rate?
The rate at which a company spends its cash, usually per month. Gross burn is total monthly spending; net burn is spending less the cash that comes in. A startup with ₹8 lakh of monthly costs and ₹3 lakh of revenue has a gross burn of ₹8 lakh and a net burn of ₹5 lakh.
What is the difference between gross burn and net burn?
Gross burn is everything that leaves the bank in a month. Net burn subtracts the revenue that comes in. Net burn sets your runway; gross burn shows how much you'd be spending with no revenue at all, which matters if revenue falls.
How do I calculate my startup's runway?
Divide the cash in the bank by your monthly net burn. ₹50 lakh with a net burn of ₹5 lakh a month is 10 months. That assumes nothing changes; if revenue is growing, the runway is longer, and if you're hiring, shorter. The calculator projects both month by month.
What is a good burn rate?
There's no good number on its own, because it depends on what the burn buys. Two better questions: does the cash last until the next milestone, and how efficiently does the burn turn into revenue? For recurring revenue, the burn multiple answers the second: David Sacks called 2 reasonable for an early-stage startup and 5 terrible.
How many months of runway should a startup have?
Ideally, enough to reach profitability. Failing that, enough to reach the next milestone that makes the company fundable again, which Y Combinator's seed fundraising guide puts about 12 to 18 months away. Since raising takes months, start well before the end: the calculator shows when you'd have to begin.
What does default alive mean?
A startup is default alive if, with expenses held where they are and revenue growing at its recent rate, it reaches profitability before the cash runs out. It's Paul Graham's term, from his 2015 essay "Default Alive or Default Dead?". A default dead company needs to raise money or cut costs to survive.
What is the burn multiple?
Net burn divided by net new annual recurring revenue over the same period. It measures how much a company burns to add each unit of ARR. David Sacks proposed it in 2020; lower is better, with 2 reasonable for an early-stage startup and 5 terrible in his words.
Should burn include GST and taxes?
Count what actually leaves the bank, including the GST and TDS you pay over and any advance tax. If input tax credit comes back months later, the monthly numbers won't show the timing, but the bank-balance mode will, because it only counts what the bank saw.
Is my data stored or sent anywhere?
No. Every calculation runs in your browser, and nothing is sent or saved. There's no share link with your numbers in it.