Startups
Runway in months
Cash divided by the monthly draw. Because the burn figure sits in the denominator, runway moves in inverse proportion to it.
The Formula
Runway (months) = Cash Balance / Net Burn Per Month
Cash divided by the monthly draw. Because the burn figure sits in the denominator, runway moves in inverse proportion to it.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| C | Cash balance today | currency | Cleared funds on hand. Excludes term sheets, undrawn tranches and restricted balances such as lease deposits. 500,000 in the default example. |
| B(net) | Net burn per month | currency per month | From the first formula. Substituting gross burn of 90,000 instead gives the 5.5556-month worst case. |
| T | Runway | months | Months of cash remaining if nothing changes. 500,000 divided by 50,000 is 10 months; at 40,000 of net burn it is 12.5 months. |
What Each Symbol Means
Ccurrency
Cash balance today
Cleared funds on hand. Excludes term sheets, undrawn tranches and restricted balances such as lease deposits. 500,000 in the default example.
B(net)currency per month
Net burn per month
From the first formula. Substituting gross burn of 90,000 instead gives the 5.5556-month worst case.
Tmonths
Runway
Months of cash remaining if nothing changes. 500,000 divided by 50,000 is 10 months; at 40,000 of net burn it is 12.5 months.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate burn rate page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Burn Rate, filed under Business. Every number the guide produces comes from substituting into this one line.