How to Calculate Runway: 5-Step Formula

Runway is the single number that determines whether your startup lives or dies. It tells you exactly how many months you have before the money runs out, and every decision you make should be informed by it.

The median seed-stage startup has 18 months of runway at close, burning $75K-$100K per month. Series A companies average 20-24 months. If your runway drops below 6 months and you have not started fundraising, you are in the danger zone. The formula is simple: Cash Balance divided by Net Monthly Burn Rate equals Months of Runway.

This guide walks you through calculating runway in five steps, from raw cash balance to setting the fundraising trigger that keeps your company alive.

Why Runway Matters More Than Revenue

Revenue gets the headlines, but runway determines survival. According to CB Insights, 38% of startups fail because they run out of cash or fail to raise new capital. That makes runway miscalculation the single most common cause of startup death.

The problem is that most founders calculate runway once during fundraising and then forget about it. Runway is not a static number. It changes every month as your burn rate fluctuates, revenue grows (or does not), and one-time expenses hit your bank account.

If you want a quick answer, use our startup runway calculator to get an instant estimate. But understanding the formula yourself is essential for making informed decisions about hiring, spending, and fundraising timing.

Startup Runway Benchmarks by Stage

Before calculating your own runway, here is what healthy looks like at each stage. These benchmarks are based on aggregated data from Carta, SaaS Capital, and Kruze Consulting reports.

Stage	Median Runway at Close	Median Monthly Burn	Typical Round Size	Start Fundraising At
Pre-seed	12-15 months	$20K-$40K	$500K-$1.5M	6-8 months remaining
Seed	18 months	$75K-$100K	$2M-$3.5M	9-12 months remaining
Series A	20-24 months	$150K-$250K	$8M-$15M	10-12 months remaining
Series B	22-26 months	$350K-$600K	$25M-$50M	12-15 months remaining
Series C+	24-30 months	$800K-$1.5M	$50M-$100M+	12-18 months remaining

For a deeper breakdown of seed-stage numbers, see our seed-stage SaaS runway benchmarks for 2026.

Step 1: Calculate Your True Cash Balance

The first step sounds obvious but trips up more founders than you would expect. Your cash balance is not just the number in your primary checking account.

What to include:

Primary operating accounts -- checking and savings balances
Money market accounts -- any liquid reserves
Short-term investments -- treasuries, CDs maturing within 90 days
Committed but unreceived funding -- only if the wire is contractually guaranteed (signed SAFE/convertible note with funds in escrow)

What to exclude:

Restricted cash -- security deposits, escrow for office leases
Accounts receivable -- money customers owe you but have not paid (unless you are factoring)
Credit lines -- available credit is not cash. Do not count it.
Unvested grant funding -- milestone-based grants where you have not hit the milestone

Worked example: Your company has $450,000 in its operating account, $50,000 in a money market fund, and $200,000 in outstanding invoices. Your true cash balance is $500,000, not $700,000. Receivables are not cash until they arrive.

Step 2: Calculate Your Monthly Burn Rate

Burn rate is how much cash you spend per month, net of revenue. There are two versions, and you need both.

Gross Burn Rate

Total monthly cash outflows before accounting for any revenue. This tells you your fixed cost exposure.

Gross Burn = Total Monthly Operating Expenses + Capital Expenditures + Debt Payments

Net Burn Rate

Total monthly cash outflows minus total monthly cash inflows. This is what you use for runway calculations.

Net Burn = Gross Burn - Monthly Revenue (Cash Collected)

Common expenses to include:

Category	Examples	Typical % of Burn (Seed)
Payroll & benefits	Salaries, health insurance, payroll taxes	60-70%
Infrastructure	AWS/GCP, SaaS tools, hosting	8-12%
Office & facilities	Rent, utilities, coworking	5-10%
Sales & marketing	Ads, content, events, sales tools	5-15%
Professional services	Legal, accounting, recruiting	3-8%
Other	Travel, equipment, miscellaneous	2-5%

Worked example: Your total monthly expenses are $120,000 and you collect $35,000 in monthly revenue. Your gross burn is $120,000 and your net burn is $85,000.

Use a trailing 3-month average rather than a single month. One-time expenses like annual software renewals or legal fees can distort a single month. For ongoing tracking, our burn rate calculator helps you model different scenarios.

Step 3: Divide Cash by Net Burn

This is the core runway formula:

Months of Runway = Cash Balance / Net Monthly Burn Rate

Using our worked example: $500,000 / $85,000 = 5.9 months.

That is dangerously low for any stage. But we are not done yet, because this formula assumes your burn rate stays constant. It almost never does.

Adjusting for burn rate changes

If you have planned hires or known expense increases coming, calculate a forward-looking burn rate:

Month	Projected Net Burn	Cumulative Cash Spent	Remaining Cash
Month 1	$85,000	$85,000	$415,000
Month 2	$85,000	$170,000	$330,000
Month 3	$95,000 (new hire)	$265,000	$235,000
Month 4	$95,000	$360,000	$140,000
Month 5	$95,000	$455,000	$45,000

With a planned hire in month 3, actual runway is closer to 5 months, not 5.9. Always model known changes.

Step 4: Adjust for Revenue Growth

If your company is growing revenue, your net burn rate decreases over time. This extends runway beyond the simple division in Step 3.

Conservative approach

Use your trailing 3-month revenue growth rate and apply it forward, then reduce it by half to be conservative. If you are growing revenue at 10% month-over-month, model 5% going forward.

Why discount by half? Growth rates almost always slow down as you scale. Planning on current growth continuing is the most common forecasting mistake startups make.

Revenue-adjusted runway example

Starting cash: $500,000. Net burn: $85,000. Monthly revenue: $35,000, growing at 5% per month (conservative estimate).

Month	Revenue	Expenses	Net Burn	Remaining Cash
Month 1	$35,000	$120,000	$85,000	$415,000
Month 2	$36,750	$120,000	$83,250	$331,750
Month 3	$38,588	$120,000	$81,413	$250,338
Month 4	$40,517	$120,000	$79,483	$170,855
Month 5	$42,543	$120,000	$77,457	$93,398
Month 6	$44,670	$120,000	$75,330	$18,068

Revenue growth extends runway from 5.9 months to about 6.2 months in this case. It helps, but when your starting position is tight, it does not save you.

For more on how burn rate interacts with growth metrics, read our guide on startup runway and burn rate benchmarks by stage.

Step 5: Set Your Fundraising Trigger

Runway is not just a measurement. It is a decision-making tool. The most important decision it drives is when to start fundraising.

The fundraising timeline math

Raising a round takes 3-6 months on average. If you start fundraising with 6 months of runway, you have essentially zero margin for error. Here is the math:

Series A fundraising timeline: 4-6 months from first pitch to wire
Minimum safe start: 9-12 months of runway remaining
Ideal start: 12-15 months of runway remaining

Setting triggers

Create three alert thresholds:

Green zone (12+ months): Focus on growth. No fundraising urgency.
Yellow zone (9-12 months): Begin building investor relationships. Update your deck. Start informal conversations.
Red zone (6-9 months): Active fundraising mode. All hands on deck.
Critical (under 6 months): Emergency measures. Consider bridge financing, cost cuts, or revenue acceleration.

What to do at each trigger

At 12 months: Update your financial model. Identify 20-30 target investors. Start attending events and requesting warm intros.

At 9 months: Send your first outreach emails. Begin formal pitch meetings. Set a target close date.

At 6 months: If you do not have a term sheet, start cutting non-essential expenses immediately. Consider a bridge round from existing investors.

For a detailed analysis of when to raise based on your burn rate, map your current metrics against the benchmarks above.

Common Runway Calculation Mistakes

Mistake 1: Using monthly averages that include outlier months

A large one-time expense (moving offices, annual insurance payment) can inflate your average burn rate. Use a trailing 3-month median, not mean.

Mistake 2: Counting committed but unsigned funding

A verbal commitment from an investor is not cash. Do not count it in your balance until the wire clears.

Mistake 3: Ignoring seasonality

B2B SaaS companies often see revenue dips in Q1 and Q3. If you calculate runway in December after a strong Q4, your actual runway may be shorter than projected.

Mistake 4: Not updating weekly

Runway is not a quarterly metric. Track it weekly and review it in every leadership meeting. The founders who run out of cash are usually the ones who stopped paying attention.

FAQ

What is a good runway for a startup?

The benchmark varies by stage. Pre-seed companies should target 12-15 months, seed-stage startups should aim for 18 months, and Series A companies typically have 20-24 months. The universal rule is to never let runway drop below 6 months without actively fundraising.

How often should I recalculate runway?

Recalculate runway weekly using your actual bank balance and trailing 3-month average burn rate. Monthly recalculations miss rapid changes in spending or revenue that can shorten your timeline significantly.

Should I include revenue when calculating runway?

Yes, use net burn rate (expenses minus revenue) for the most accurate runway figure. However, if your revenue is volatile or early-stage, also calculate runway using gross burn as a worst-case scenario to understand your exposure if revenue drops to zero.

Start Tracking Your Runway Today

If you are not tracking runway weekly, you are flying blind. Use our free startup runway calculator to model your current position, or sign up for culta.ai to track burn rate, runway, and fundraising triggers automatically across all your entities.

Sources

CB Insights. "Top Reasons Startups Fail." 2024 Report.
Carta. "State of Private Markets Q4 2025." Data on median seed round sizes and runway.
SaaS Capital. "SaaS Benchmarks Report 2025." Burn rate and growth benchmarks.
Kruze Consulting. "Startup Burn Rate and Runway Benchmarks." 2025 analysis of 800+ startups.
First Round Capital. "State of Startups 2025." Fundraising timeline data.