Burn Rate and Runway Calculator
How long the cash lasts, on revenue collected rather than billed.
- Gross burn — everything going out
- ₹30,00,000.00/mo
- Less revenue actually collected
- −₹10,00,000.00/mo
- Net burn
- ₹20,00,000.00/mo
- Over twelve months of runway
- 15.0 mo
Net burn is gross burn less revenue actually COLLECTED, not billed — that distinction is the whole point, and using invoiced revenue is how a company convinces itself it has runway it does not. Use a trailing three-month average rather than last month, because burn is lumpy. Raising takes roughly six months, so runway under twelve months means starting now rather than later. The burn multiple — net burn against net new annual recurring revenue — is the efficiency measure that matters to investors: under 1 is excellent, over 2 is a problem. If net burn is zero or negative you are default alive, and runway is not a meaningful number.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
Gross burn is everything going out of the bank each month. Net burn is that less the revenue you actually collected — not the revenue you invoiced, which is the distinction that matters and the one companies most often blur when reassuring themselves.
Runway is cash divided by net burn, and it is best computed on a trailing three-month average because burn is lumpy: an annual insurance premium or a hiring month will otherwise distort it badly.
Raising money takes roughly six months from first conversation to money in the bank, so runway under twelve months means starting now rather than later. If net burn is zero or negative you are default alive, and runway stops being a meaningful number.
Net burn = monthly cash out - monthly cash collected. Runway = cash balance / net burn. Burn multiple = annualised net burn / net new annual recurring revenue.Gross burn excludes non-cash items such as depreciation and ESOP expense, and includes cash capital expenditure — it is what actually leaves the bank, not what appears in the profit and loss statement.
Frequently asked questions
Should I use billed or collected revenue?
Collected, always. Runway is a question about the bank balance, and an invoice that has not been paid does not extend it. Using billed revenue is the single most common way a company convinces itself it has months of runway it does not have, particularly where enterprise customers pay on 60 or 90 day terms.
What is a good burn multiple?
Under 1 is excellent — you are adding more than a rupee of annual recurring revenue for every rupee burned. Between 1 and 2 is reasonable for an early-stage company. Above 2 suggests the growth is being bought rather than earned, and above 3 is usually a problem. It has become the efficiency measure investors reach for first, because unlike growth rate it cannot be improved simply by spending more.
When should I start raising?
At twelve months of runway, not at six. A round typically takes four to six months from first meeting to money in the bank, and negotiating with three months left removes every piece of leverage you have — investors can see the deadline as well as you can. The company with nine months of runway gets better terms than the identical company with three.