How Long Is Your Runway, Really?
Burn Rate and Runway Math Without the Guesswork

Short answer

Runway equals cash in the bank divided by average net monthly burn. Net burn is monthly spending minus incoming revenue; gross burn ignores revenue. A startup with $600K in cash losing $50K per month has 12 months of runway. Use a three-month average burn and exclude one-off inflows.

Ask three founders how to calculate runway and you'll get the same formula — then three different numbers from the same bank statement. The formula is trivial; the judgment calls inside it are where runways quietly lose four months. And the stakes have grown: per Carta's Q2 2025 data, the median gap between seed and Series A stretched to 616 days — roughly 20 months. Miscount your runway in that market and you discover it mid-raise.

How do you calculate startup runway and burn rate?

Two formulas, per Carta's own definition:

• Net burn = total monthly cash out − total monthly cash in
• Runway (months) = current cash ÷ average net monthly burn

Worked example. Cash today: $600K. Over the last three months you spent $195K total and collected $45K in revenue. Net burn = ($195K − $45K) ÷ 3 = $50K/month. Runway = $600K ÷ $50K = 12 months.

The judgment calls that separate a real number from a flattering one:

1. Average over three months, not one. Any single month is distorted — annual insurance, a tax payment, a customer prepaying. Stripe's guidance is the same: smooth it, or a quiet month flatters you.
2. Use cash movements, not the P&L. Revenue booked isn't revenue collected. Compute burn from bank activity.
3. Exclude one-offs from the baseline. A grant, a tax refund, an annual prepayment — celebrate them, then take them out of the average.
4. Burn is not static — project it. If two engineers start next month at $28K/month fully loaded, your real burn is $78K and your "12 months" was never true. Runway should be read off a forward cash model, not a rearview average. (The difference between spending and losing money matters here too — see gross burn vs net burn.)

Your reported runway is not your fundable runway

Here's the number founders don't compute. "Twelve months of runway" describes when the bank account hits zero. But you can't be raising the week you hit zero — a raise realistically takes about six months of preparation, meetings and closing mechanics, and term sheets signed by a desperate founder price accordingly.

So run three clocks, not one:

The decision rule: your milestone must land before your fundable runway ends. In the example, everything that makes the company fundable has to happen in six months, not twelve. If the milestone math says nine months, you have three options and all of them are cheaper today than in month ten: cut burn, accelerate revenue, or raise a smaller bridge now.

That's also why the "months of runway" a founder quotes and the one an investor hears are different numbers. Investors mentally deduct the raise window; founders rarely do.

When runway is short, switch clocks

Below roughly 12 months, monthly averages get too coarse — intra-month timing (payroll on the 15th, receivables on the 28th) starts deciding whether you make it. That's the point to run a weekly 13-week cash flow forecast alongside the monthly view, and to let your operating financial model investors actually read drive the burn projection rather than a trailing average.

The five ways founders overstate their runway

Most runway errors flatter you, which is exactly why they survive. Check your own math against this list:

1. Counting booked revenue as collected revenue. An invoice on net-60 terms is not cash for two months — sometimes three. Burn is a bank-account number.
2. Averaging in a one-off inflow. A grant, a tax refund or an annual prepayment lowers last quarter's apparent burn and quietly adds phantom months.
3. Ignoring committed spend. Signed offers, a new lease, the conference sponsorship you already agreed to — future burn is higher than trailing burn for almost every growing company.
4. Forgetting the lumpy bills. Quarterly VAT or estimated taxes, annual insurance and D&O renewals land as spikes. In the eurozone, payroll-heavy months around 13th-month salaries do the same.
5. Assuming revenue only goes up. One churned anchor customer can move net burn 30% overnight. If that sentence made you flinch, model it.

Each of these errors is small. Two or three together routinely turn "14 months of runway" into nine — discovered, invariably, at the worst possible moment.

What this means for you

Recalculate runway today, three ways: trailing three-month net burn, forward burn including committed hires, and gross burn with revenue at zero. Then subtract six months from the smallest answer. If the result makes you uncomfortable, good — it did that while you still have moves left. Runway math isn't a report; it's a countdown that tells you which decisions are still available.