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Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Calculate simple runway by dividing available cash by monthly net burn: runway in months = available cash ÷ monthly net burn. The result is a quick estimate, not a reliable cash-out date if revenue, spending or collections are changing. For a SaaS business, use the quotient as a starting point, then build a month-by-month forecast and work backward from the milestone you need to reach and the time a fundraise may take.
Calculate gross burn, net burn and simple runway
Gross burn is the cash a company spends in a month. Net burn subtracts operating cash inflows from operating cash outflows, so it describes how quickly the business is drawing down its cash after receipts. Mercury defines it as Net burn rate = Total monthly cash outflows − Total monthly cash inflows
in its guide, updated July 29, 2026. See Mercury’s cash-burn guide and CRV’s runway guide.
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For a pre-revenue company, gross and net burn may be similar. Once customer cash is coming in, the measures can diverge. Net burn is the right figure for the basic runway quotient; gross burn is still useful as a view of the cost base if receipts weaken. Exclude financing proceeds from ordinary operating inflows so a new investment does not make operating burn appear lower.
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For example, $300,000 of available cash divided by $50,000 of monthly net burn gives six months of simple runway. That is arithmetic, not a benchmark, and assumes net burn stays constant. CRV gives another illustration: $600,000 divided by $75,000 of monthly net burn equals eight months, under the same steady-burn assumption.
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Build a cash-based estimate from company records
- Reconcile available cash. Check the balance against bank and cash records. Separate restricted or earmarked funds and cash needed for known obligations rather than treating all reported cash as available for ordinary operations. Runway Forecaster’s calculation overview discusses cash availability.
- Calculate monthly operating inflows and outflows. Review at least the last three months of cash activity. Keep operating receipts and expenses distinct from financing proceeds, and calculate gross and net burn for each month. Mercury and Kruze Consulting’s burn-rate guide explain the relevant measures.
- Compare the average with the latest month. A trailing three-month average can smooth a lumpy invoice or a late customer payment, but it can also hide accelerating burn. Identify unusual expenses, annual payments, refunds and delayed collections. CRV recommends recomputing a trailing three-month average monthly and giving recent months more weight if burn is increasing.
- Divide cash by a selected monthly net-burn figure. State whether you use the latest month or a trailing average. If net burn is zero or negative, the quotient does not produce a meaningful finite runway estimate; use a cash-flow forecast instead.
- Refresh the calculation. Mercury recommends reviewing burn monthly and updating a rolling 13-week cash projection weekly. The short-term projection helps surface near-term cash pressure; it does not replace a longer-range monthly plan.
Forecast changing revenue and spending month by month
When revenue is growing, do not assume that the latest month’s net burn will continue unchanged. Model expected receipts and spending for each month, using the timing cash is expected to arrive and leave rather than relying only on booked revenue or budget totals. Include hiring, marketing, infrastructure, debt payments, taxes and known commitments. Account deliberately for annual prepayments, refunds and annual SaaS subscriptions: a large cash event can distort a monthly trend without representing a lasting change in the business.
Build at least a base case and a downside case. Vary assumptions that could materially shift cash, such as slower growth, later collections or faster expenses. Show when cash could fall below the company’s minimum operating buffer as well as when a modeled balance reaches zero. A zero-balance date may be too late to take useful action.
- Base case: expected revenue, collection timing and spending under the current plan.
- Downside case: slower receipts or growth and faster costs, with the resulting buffer-crossing and cash-out months.
- Plan changes: compare the cash runway gained from delaying hires or reducing costs with the operating impact and any milestone delay.
Decide when to begin fundraising
Fundraising takes calendar time, but there is no universal runway trigger. Mercury advises beginning preparation when runway falls below 9–12 months. CRV recommends opening a round with 12–18 months remaining, budgeting 3–6 months for the raise, and aiming for 18–24 months of post-close runway tied to a milestone. These are recommendations from those sources, not observed guarantees or rules that fit every SaaS company. Read Mercury’s timing guidance and CRV’s runway guidance.
The difference between the ranges is a reason to choose a trigger for your circumstances, not to average them into a supposedly universal answer. Stage, traction, geography, market conditions, investor process and whether conversations have already begun all matter. Set a preparation point while the company still has options, then work backward from the expected close date using the downside forecast and a contingency for delays.
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Size the raise around a milestone
Start with a specific result the company needs to reach—one that could support a subsequent round or a path to profitability. Estimate the cash required to reach it, add spending during the expected fundraising period and a sensible delay buffer, then subtract cash expected to remain available. The resulting amount is more useful than choosing a round size by applying a fixed number of runway months.
Compare a raise with a plan to reach profitability on current cash. Paul Graham’s “Default Alive or Default Dead?” test asks whether the startup reaches profitability if expenses stay constant and recent revenue growth continues. If the answer is no, the plan depends on raising or changing the growth and spending assumptions. Make that dependency explicit in the forecast. A spreadsheet or cash-flow forecasting tool can help model the cases; if records are irregular or financing activity complicates them, accounting, bookkeeping or fractional CFO support may be useful but is optional.
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