Acorn9

Burn Rate and Runway: A Founder's Primer

What burn rate and runway actually mean, how to calculate them, and the runway investors expect at each stage — with an interactive calculator.

By the Acorn 9 team

Burn rate and runway are the two numbers every founder should be able to recite without checking a spreadsheet. They determine how long you have to hit your next milestone — and therefore how much time you actually have to build.

What burn rate means

Burn rate is how much cash your company spends per month, net of revenue. If you spend $80,000 a month and bring in $20,000 in revenue, your net burn is $60,000.

Two flavors matter:

  • Gross burn — total monthly cash out the door, ignoring revenue.
  • Net burn — gross burn minus revenue. This is the number that drives runway.

Early on, revenue is often near zero, so gross and net burn are nearly the same. As revenue grows, net burn is the figure investors and your board will track.

What runway means

Runway is how many months you can operate before you run out of cash:

Runway (months) = Cash on hand ÷ Net monthly burn

If you have $500,000 in the bank and burn $60,000 a month net, you have roughly 8.3 months of runway. Use the calculator below to plug in your own numbers.

Interactive

Runway calculator

Enter your cash on hand and net monthly burn to see how many months of runway you have.

Estimate only. Assumes a flat burn rate; real runway shifts with revenue and spend changes.

Why it governs your fundraising calendar

Raising a round almost always takes longer than founders plan for — two to four months from first meeting to wired funds is normal, and it stretches in a tougher market. That has a direct consequence:

  • Aim to start raising with at least 6 months of runway left.
  • Target 18-24 months of runway out of a priced round, so you can reach the milestone that justifies the next valuation step.

Running your runway down to the wire is the single most common way founders lose leverage in a negotiation. Investors can tell when you have no alternative to their term sheet.

Watch the trend, not just the snapshot

A single runway number is a snapshot. What your board actually wants to see is the trajectory: is net burn climbing faster than revenue, holding flat, or improving? A startup with 10 months of runway and improving unit economics is in a far stronger position than one with 14 months and accelerating burn.

Track burn monthly, recompute runway every time it moves materially, and revisit the assumptions behind both whenever you change headcount or pricing.

FAQ

Frequently asked questions

What is a good burn rate for a startup?
There is no universal number — a healthy burn rate is one that buys you enough runway to hit the milestone that unlocks your next raise. A pre-seed team validating a prototype might burn $30-60K/month; a Series A company scaling go-to-market might burn $300-500K/month. What matters is the ratio of burn to progress, not the absolute figure.
How many months of runway should I keep?
Most investors want to see 18-24 months of runway after a priced round, and you generally want to start raising again with at least 6 months left. Raising takes longer than founders expect, and running below a 6-month cushion weakens your negotiating position.
What is the difference between gross and net burn?
Gross burn is your total monthly cash outflow (all expenses). Net burn subtracts revenue: net burn = expenses minus revenue. Runway is calculated from net burn, because incoming revenue offsets what you spend.