Burn Rate & Runway Calculator: How Long Until You Run Out of Money?

• Burn rate = monthly cash spent net of revenue. Runway = Cash in bank ÷ Net burn rate. If you have ₹1.5 crore and burn ₹15 lakh/month net, runway = 10 months.
• The rule of thumb: always maintain 12–18 months of runway. Below 6 months is a crisis. Below 3 months is an emergency.
• Gross burn vs. net burn: gross is all spending; net subtracts revenue. Investors ask about net burn — your gross burn tells you operational efficiency, net tells you how fast you're consuming the bank.
• When calculating runway, include the 3–6 months needed to close a funding round — so 10 months of cash in the bank means you have ~5 months before needing to start fundraising urgently.

Use our free Burn Rate and Runway Calculator to find net burn, gross burn, runway in months, and the date your cash runs out — and model different revenue growth scenarios.

Burn Rate Formulas

Gross Burn Rate = All Monthly Expenditures

Net Burn Rate = Gross Burn − Monthly Revenue

Runway (months) = Cash in Bank ÷ Net Burn Rate

Zero Cash Date = Today + Runway months

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Worked Example

SaaS startup, early stage:

Monthly Expenditures:

Expense	Amount
Salaries (8 employees)	₹12,00,000
Office rent	₹80,000
Cloud/hosting	₹1,20,000
Marketing	₹2,00,000
Software tools	₹40,000
Legal/accounting	₹30,000
Miscellaneous	₹30,000
Gross Burn	₹17,00,000

Monthly Revenue: ₹4,50,000 Net Burn: ₹17,00,000 − ₹4,50,000 = ₹12,50,000/month

Cash in bank: ₹1,80,00,000 (₹1.8 crore) Runway: ₹1,80,00,000 ÷ ₹12,50,000 = 14.4 months

Zero cash date: approximately 14–15 months from now.

Fundraising implication: To close the next round, start raising at month 8–9 (6 months before cash runs out). That means fundraising begins in approximately 5–6 months from today — not 14 months.

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Burn Rate Benchmarks by Stage

Stage	Typical Monthly Burn	Employees
Pre-seed (bootstrapped)	₹1–₹5 lakh	1–3
Pre-seed (funded)	₹3–₹15 lakh	2–6
Seed	₹10–₹50 lakh	5–20
Series A	₹50L–₹2.5Cr	20–75
Series B	₹2–₹10 crore	75–300

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Runway Scenarios: Revenue Growth Impact

Assumption: Net burn ₹12.5L/month, Cash ₹1.8Cr, Revenue growing at X% monthly:

Revenue Growth Rate	Months of Runway
0% (flat revenue)	14.4 months
5% monthly growth	17.2 months
10% monthly growth	21.6 months
15% monthly growth	28.4 months
20% monthly growth	38.2 months
30% monthly growth	Indefinite (revenue catches burn within ~12 months)

Revenue growth dramatically extends runway — not just because it reduces net burn but because as revenue approaches gross burn, the company approaches default alive (cash flow positive).

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Default Alive vs. Default Dead

Paul Graham (Y Combinator) defines:

Default Alive: If the company makes no changes, revenue will overtake expenses before cash runs out.

Default Dead: If the company makes no changes, it will run out of cash before reaching profitability.

Simple test: 1. What is your monthly revenue growth rate? (e.g., 8%) 2. What is your monthly gross burn? (e.g., ₹17L) 3. At current growth, what month does revenue = gross burn?

If that month is before your zero cash date: Default Alive ✅ If after: Default Dead ❌ — you need either: (a) raise funding, (b) cut burn, (c) grow revenue faster.

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Burn Rate Reduction: Where to Cut First

When runway is dangerously low (<6 months), prioritise cuts:

Cut immediately (low impact on growth):

• Non-essential SaaS subscriptions (audit everything)
• Office space (negotiate, reduce, go remote)
• Contractor/agency fees (bring in-house or pause)
• Conferences and travel

Cut carefully (moderate impact):

• Marketing budget (but maintain what's driving leads)
• Hiring freeze (not layoffs, just stop new hires)

Cut as last resort (high impact):

• Salaries (salary cuts need careful handling, legal compliance in India)
• Core team (layoffs — last resort, requires severance and legal process)

The burn reduction rule: Never cut anything that directly drives revenue. Cut overhead aggressively before touching growth engines.

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Investor Communication About Burn and Runway

Investors ask burn rate questions constantly. Know your numbers:

Key metrics to have ready:

• Gross burn rate (monthly)
• Net burn rate (monthly)
• Current MRR and MoM growth rate
• Current runway (months)
• Projected runway with next fundraise
• Burn multiple (net burn ÷ net new ARR — lower is better; below 1× is excellent)

Burn Multiple benchmark:

Burn Multiple	Efficiency
Below 0.5×	Excellent
0.5–1×	Good
1–2×	Acceptable
2–5×	Concerning
Above 5×	Burning too fast

If you burn ₹15L/month net and add ₹10L in new ARR: burn multiple = 1.5× — acceptable for early stage.

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FAQ

What is a good burn rate for a seed-stage startup?

Depends on team size and location. A 5-person all-remote team in India can operate at ₹8–₹15 lakh/month gross burn. A team with an office in Mumbai/Bangalore with 10 people runs ₹20–₹40 lakh. The right burn rate is one that generates meaningful progress toward the next milestone — not the lowest possible.

How much runway should a startup have before raising?

Begin raising when you have 9–12 months of runway. Target to close the round with 12–18 months of post-close runway. Indian funding rounds typically take 3–6 months to close from first meeting to wire transfer.

What is the difference between gross burn and net burn?

Gross burn = all money going out of the company monthly (total expenses). Net burn = gross burn minus all revenue coming in. If you spend ₹20L and earn ₹8L: gross burn is ₹20L, net burn is ₹12L. Investors track net burn; CFOs track both.

What happens when a startup's runway runs out?

If no new funding is secured, the company typically: (1) attempts emergency bridge financing from existing investors, (2) pursues urgent M&A or acquihire, (3) implements emergency cost cuts/layoffs to extend survival, or (4) shuts down. In India, insolvency for startups is typically handled through voluntary winding up under the Companies Act.