What Is Your Burn Rate and How Long Is Your Runway?
What this calculates
This calculator works out how many months of runway your cash buys, using your monthly expenses and revenue to separate gross burn from net burn. It then checks your burn multiple against published benchmarks. Sivan Kadosh, a fractional CPO for B2B SaaS founders, built it. It runs free on saasfractionalcpo.com and needs no signup.
A SaaS company with $1,300,000 in cash, $180,000 in monthly expenses and $80,000 in monthly revenue has a net burn of $100,000 and 13.0 months of runway.
Your numbers
Cash position
Monthly numbers
Growth efficiency
Results update as you type. Nothing is sent anywhere, the calculation runs in your browser.
Months of runway
Live13.0 months
on $100,000 of net burn a month
- Gross burn
- $180,000 /mo
- Net burn
- $100,000 /mo
- Burn multiple
- 1.7×
- Runway at 10% less burn
- 14.4 months
Watch
You are inside the window where a raise still runs on your timetable, but not by much. Twelve months is the point where the process starts dictating terms rather than the other way round, and you are close enough to it that the next two quarters decide whether you raise from strength. The burn multiple tells you whether the spending is buying growth while you decide.
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How is this calculated?
Gross burn is your monthly operating expenses. Net burn takes the revenue you collect out of that, so it is the amount your bank balance actually falls by each month. Runway divides the cash you hold by net burn. The burn multiple puts one quarter of net burn against the net new ARR that quarter produced, which is what turns a spending figure into an efficiency one.
Formula
Gross burn = monthly operating expenses Net burn = monthly operating expenses − monthly revenue Runway = cash ÷ net burn Burn multiple = (net burn × 3) ÷ net new ARR for the quarter Net burn at or below zero means there is no runway to count. The tool reports default alive instead.
- Gross burn is every operating cost that leaves the bank in a month, payroll included. Capital expenditure and debt repayment are not in it.
- Revenue means cash collected in the month, not revenue booked. A company invoicing on net-60 terms burns faster than its income statement suggests.
- Runway holds burn and revenue flat. Neither holds flat, which is why this is a planning figure and not a date.
- Cash is the bank balance alone. Undrawn debt facilities, receivables and committed but unsigned contracts are excluded on purpose.
- The burn multiple follows the definition David Sacks published: net burn over net new ARR, with both measured across the same quarter.
When this number misleads
This treats every month as the same month. A company with heavy annual prepayment can show twelve months of runway in January and seven in July with nothing having changed about the spending. If more than a third of your revenue arrives as annual invoices, run this at the low point of your cash cycle rather than today, because the low point is the month that decides whether you have a problem. Paying part of a senior hire in equity is one of the few levers that moves burn without cutting capability, and equity against cash for a fractional CPO works through what that trade actually costs.
What counts as a healthy runway?
Two numbers answer that, and they answer different halves of it. Runway says how long the cash lasts. The burn multiple says whether the spending that consumes it is buying growth, which is the question an investor asks second and a founder should ask first.
| Metric | Strong | Acceptable | Warning |
|---|---|---|---|
| Runway | 18 months or more | 12 to 18 months | Under 12 months |
| Burn multiple | Under 1.5 | 1.5 to 2 | Over 2 |
The burn multiple bands come from David Sacks, who defined the metric. His published scale runs from under 1, which he calls amazing, through 1 to 1.5 as great and 1.5 to 2 as good. He labels 2 to 3 suspect and anything above 3 bad. He also says the number should tighten as a company matures, so a seed-stage 2 and a Series B 2 are not the same finding.
On runway, J.P. Morgan’s guidance for founders describes the long-standing rule of thumb as 18 to 24 months of cash after a raise, and notes that tighter funding markets have moved the recommendation closer to 24 to 36 months. The same guidance says investors look harder at companies holding less than six months.
The 12-month trigger in the table is not a published benchmark. It is my own practitioner guidance. In my engagements I treat 12 months as the point to start the raise rather than the point to start worrying, because a process run below that happens under time pressure, and time pressure shows up in the terms a founder accepts. The arithmetic underneath it is the same arithmetic that drives a full SaaS financial model.
Questions founders ask about this
What is the difference between gross burn and net burn?
Gross burn is everything leaving the bank in a month. Net burn subtracts the revenue that comes in, so it is the amount your balance actually falls by. Investors ask about net burn because it sets the runway. Gross burn is the one you can act on, because you control costs and you only partly control revenue.
How much runway should a Series A SaaS company have?
J.P. Morgan’s guidance for founders describes the long-standing rule of thumb as 18 to 24 months of cash after a raise, and notes that tighter funding markets have pushed the recommendation closer to 24 to 36 months. The same guidance says investors scrutinize companies holding less than six months more carefully. Below 12 months the raise starts running on the investor’s timetable rather than yours.
What is a good burn multiple?
David Sacks, who defined the metric, calls anything under 1 amazing and 1 to 1.5 great. From 1.5 to 2 is good, 2 to 3 is where he says the number turns suspect, and above 3 is bad. He also expects the figure to improve as a company matures, so the same 2 means different things at seed and at Series B.
When should I start fundraising based on runway?
There is no published benchmark for this, so the figure here is practitioner guidance rather than research. In my engagements I treat 12 months as the point to start the raise. Below that the process runs under time pressure, and time pressure is visible in the terms a founder ends up accepting.
Does deferred revenue count in a burn calculation?
The cash from an annual prepayment is already in your bank balance, so it belongs in the cash figure at the top of this tool. It does not belong in monthly revenue, because you collected it in an earlier month and counting it again would count it twice. A company with heavy prepayment looks better on runway than on net burn, and both readings are true.
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