Last updated: 31 October 2026
Startup runway is the number of months until cash runs out at the current rate of spending, calculated by dividing cash in the bank by net monthly burn.
What is runway?
Runway is the number of months until cash runs out at the current rate of spending. It is a simple measure of time, but it shapes many decisions a founder makes. Gross burn is total monthly cash spending. Net burn is gross burn minus monthly cash revenue received. The difference matters because revenue extends the time a company has before it needs more funding. A business with high gross burn but strong monthly revenue may still have a modest net burn. Founders should track both, but runway itself is based on net burn, since that is the cash actually leaving the business each month.
What is the runway formula?
Runway in months equals cash in the bank divided by net monthly burn. This gives the number of months the current cash balance can support the business at the present rate of spending. For example, cash of £600,000, gross burn of £90,000, and cash revenue of £30,000 gives a net burn of £60,000, which produces a runway of 10 months. The zero-cash date is today plus runway, so in that example it is 10 months from today. The formula is only as good as the burn figure used, which is why averaging and forecasting matter.
| Item | Amount |
|---|---|
| Cash in bank | £600,000 |
| Gross burn | £90,000 |
| Cash revenue | £30,000 |
| Net burn | £60,000 |
| Runway | 10 months |
How do you calculate burn rate?
Use the average net cash outflow over the last three months, not one month, to smooth lumpy payments. A single month can be distorted by annual bills, payroll timing or supplier payments. For example, net burn of £55,000, £60,000 and £65,000 over three months gives an average of £60,000. Include payroll, tax, rent, software, cloud and AI inference bills. Exclude non-cash items, since they do not reduce the bank balance. If costs are rising, use a forecast month by month rather than a flat average, because a growing burn shortens runway faster than a backward-looking figure suggests.
How do you extend runway?
Cut spend or raise revenue to lower net burn. For example, with £600,000 in cash, reducing net burn from £60,000 to £50,000 extends runway from 10 months to 12 months. Small changes in monthly burn have a large effect on runway because the improvement repeats every month. Skok’s core question is whether you can make more profit from customers than it costs to acquire them. If the answer is no, growth spending may be shortening runway without building value. Our estimates AI token burn and runway.
When should you start raising?
Do not wait for the last months; fundraising takes time. That is our view, not a rule. Starting early leaves room for a slower process, a failed round, or a change in market conditions. Founders who begin with ample runway keep more options and avoid negotiating from weakness.
Frequently asked questions
What is the difference between net and gross burn?
Gross burn is total monthly cash spending. Net burn is gross burn minus monthly cash revenue received. Runway is calculated using net burn, because it reflects cash actually leaving the business.
What if my burn rate is growing each month?
Use a forecast month by month rather than a flat average. A growing burn shortens runway faster than a backward-looking figure suggests, so a simple division may overstate the time available.
What if net burn is zero or negative?
Runway is not limited by cash. If the business is not consuming cash, the cash balance does not set a time limit in the same way.
Should I include non-cash costs such as depreciation?
Exclude non-cash items. Only cash spending affects the bank balance and therefore runway.
How often should I recalculate runway?
Recalculate regularly using the latest cash balance and an updated three-month average or forecast burn. Runway changes as spending and revenue change, so a stale figure can mislead.
Sources
Figures and prices were checked on 31 October 2026; check the linked sources before relying on them. This article is general information, not tax, legal or investment advice.
