Breakdown
How it works
Gross burn is total monthly spend; net burn is spend minus revenue. Runway = cash ÷ net burn, but growing revenue extends it — the projection applies monthly revenue and cost growth and shows the month cash flow turns positive. Investors expect 18–24 months of runway after a raise.
Formula
Worked example
1.5m cash, 180k expenses, 60k revenue growing 8% a month, costs 2%: flat runway 12.5 months; with growth, cash runs out in month 16 — three months before breakeven (month 19). You need a small bridge or faster growth.
Frequently asked questions
When should I start fundraising?
With 9–12 months of runway left — rounds take 3–6 months and you want leverage, not desperation.
What is a healthy burn multiple?
Net burn ÷ net new ARR. Under 1 is excellent, 1–2 good, above 3 means growth is too expensive.
How do I cut burn without killing growth?
Protect sales and product spend that drives revenue; cut discretionary costs, renegotiate contracts, and review headcount in non-revenue functions first.