Calculate simple SaaS runway by dividing available cash by monthly net burn: runway in months = available cash ÷ monthly net burn. Net burn is operating cash paid out minus operating cash received. That quotient is a useful starting point, not a reliable cash-out date when revenue, costs, or collection timing are changing. Use a month-by-month cash forecast to decide when to prepare for fundraising and how much capital a milestone requires.
Calculate net burn before dividing
Gross burn is the cash flowing out of the business for a period. Net burn subtracts operating cash inflows from those outflows. As Mercury’s burn-rate guide puts it: “Net burn rate = Total monthly cash outflows − Total monthly cash inflows.”
For runway, use operating cash actually received and paid, not revenue recognized in accounting records but not yet collected. Keep financing proceeds separate from operating inflows: a new investment increases cash, but it does not mean the company’s operations are generating less burn. If useful, track both measures: net burn shows the observed monthly cash draw, while gross burn shows the outflow level if customer receipts weaken.
For example, $300,000 in available cash divided by $50,000 in monthly net burn equals six months of simple runway. This is arithmetic, not an industry benchmark, and it assumes burn stays constant. Mercury explains burn definitions and cash items in its cash-burn guide; CRV’s runway guide also illustrates the quotient.
#1 Best Overall
Build the estimate from your cash records
- Reconcile usable cash. Check bank and cash records, then identify funds that are restricted, earmarked, or needed for known obligations. Do not count money that cannot reasonably fund ordinary operations. Runway Forecaster’s calculation guide discusses available cash and scenario planning.
- Calculate monthly gross and net burn. For each of at least the last three months, total operating cash outflows and operating cash inflows. Exclude financing proceeds from operating inflows. Kruze Consulting and Mercury describe the underlying burn calculation.
- Compare the average with the latest month. A trailing three-month average can smooth an unusually large invoice or late customer payment, but it can also hide burn that is rising. Explain one-off expenses, annual bills, refunds, and delayed receipts rather than letting them disappear into an average. CRV recommends recomputing the trailing average monthly and giving recent months more weight when burn is increasing; see its runway guidance.
- Divide usable cash by a selected monthly net-burn figure. State whether you used the latest month, a trailing average, or another planning assumption. If net burn is zero or negative, the quotient is not a meaningful finite runway estimate; use a cash-flow forecast instead. Mercury recommends reviewing burn monthly.
- Model cash month by month. Forecast expected customer receipts and planned outflows, including hiring, marketing, infrastructure, debt payments, taxes, and known commitments. Show when cash could fall below your minimum operating buffer, not only when a model reaches zero. Update assumptions as new actuals arrive. Mercury recommends a rolling 13-week cash projection updated weekly for near-term visibility.
- Run a downside case. Test slower growth or collections alongside faster expenses. Treat annual prepayments, refunds, and annual SaaS subscriptions deliberately so a single cash event does not distort the trend. The Runway Forecaster guide covers scenario considerations.
Account for growing revenue and changing burn
Month-over-month revenue growth does not make a fixed-burn runway calculation a forecast. Growth can improve cash inflows, but the timing of collections may lag invoices, and costs may rise before the related revenue arrives. A monthly model makes those timing differences visible.
Use a trailing average as a planning reference, not as a substitute for projecting the next months. If recent burn is accelerating, a simple average may overstate runway; if a month included a one-time annual payment, it may understate the underlying pace. Show the assumptions behind both a base case and a downside case, and refresh the model against actual cash activity.
Rank #2
- Ideal for Gifting
- Ideal for a bookworm
- Compact for travelling
For an additional reality check, Paul Graham’s “default alive” test asks whether the startup reaches profitability with expenses held constant and recent revenue growth continuing. If not, the current trajectory relies on raising capital or changing growth and spending assumptions. The test and its limits are described in Graham’s essay.
Estimate when to start fundraising
There is no universally correct runway trigger. Recommendations differ: Mercury, updated July 29, 2026, advises beginning preparation when runway falls below 9–12 months; CRV, published August 18, 2026, recommends opening a round with 12–18 months remaining and budgeting 3–6 months for the raise. These are advisory ranges, not observed guarantees. Stage, traction, geography, market conditions, investor process, and whether outreach is already underway affect the buffer that makes sense.
Recommended Free Tools
Work backward from the expected financing close date, not just the first investor meeting. Decide when preparation must begin so the company still has choices if the process takes longer than expected. The appropriate trigger should follow from the company’s forecast and fundraising circumstances rather than from a single rule of thumb.
Size a raise around a milestone
Start with a specific milestone that could support the next financing or a path to profitability. Forecast the cash needed to reach it, include spending during the expected raise period, add a contingency for delays, and subtract cash expected to remain available. The result is a company-specific target, not a fixed number of months or a standard amount.
Rank #4
CRV’s current guidance is to target 18–24 months of post-close runway tied to a milestone. Treat that as CRV’s recommendation, not a universal requirement; a suitable horizon depends on the milestone and the company’s plan. See CRV’s discussion of runway and raise timing and StartWise’s cash-runway guide.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare the plans that could change the outcome
Runway decisions are clearer when scenarios are compared on the same measures: cash balance by month, the point at which cash falls below the operating buffer, milestone timing, and the consequences for the business.
Best Value
- It can be a gift option
- Comes with secure packaging
- Helpful in various ways
| Planning case | What to model | Decision it informs |
|---|---|---|
| Base versus downside | Expected receipts and collection timing, expenses, monthly cash balance, and buffer date under each set of assumptions. | How much the outcome depends on growth, collections, or spending assumptions. |
| Current plan versus cost or hiring changes | Runway gained, milestone timing, and operating impact of each change. | Whether extending cash materially delays the result the company needs to achieve. |
| Raise versus default-alive plan | Likelihood and timing of reaching profitability on current cash, milestone value, and exposure to a delayed or unsuccessful raise. | Whether the plan depends on financing, or can reach sustainability through a different growth and spending path. |
Worked example: eight months is a starting point
CRV gives an example of $600,000 in cash and $75,000 in monthly net burn: $600,000 ÷ $75,000 = eight months of simple runway. That result assumes steady monthly net burn; it does not establish when cash will actually run out if revenue, costs, or collections change. The example appears in CRV’s runway guide.
Keep the forecast decision-ready
- Reconcile the starting cash balance and state what is unavailable or committed.
- Show actual monthly gross and net burn alongside the chosen planning rate.
- Make receipt timing, growth, spending, and one-off cash events explicit.
- Track the cash-buffer threshold and milestone date in base and downside cases.
- Refresh actuals regularly; Mercury recommends monthly burn review and weekly updates to a rolling 13-week cash projection.
Irregular cash flows, financing transactions, or complex obligations can make bookkeeping or fractional finance support useful, but the forecast still needs assumptions that management can explain and update. This is general planning guidance; the company’s records, commitments, and financing conditions determine its actual runway.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
