Find out your exact net burn rate, cash runway, and your "zero cash date". Essential for navigating startup survival.
Need a complete forecast? Instantly generate a robust 3-statement model from your accounting software or PDF reports with FinModel's AI agent to manage your runway properly.
Build Financial Models FreeYour guide to managing runway, cash flow, and default alive metrics.
The burn rate is the amount of money a startup loses per month. It's a measure of negative cash flow. There are two types: Gross Burn (total monthly expenses) and Net Burn (total monthly expenses minus monthly revenue). VCs use Net Burn to understand exactly how quickly you are consuming your cash balance.
Runway is the amount of time (usually expressed in months) your startup has before it completely exhausts its cash balance, assuming your net burn rate remains constant. The formula is simple: Runway = Current Cash Balance ÷ Monthly Net Burn.
Paul Graham famously coined the terms "Default Alive" and "Default Dead." If your expenses remain constant and your revenue grows at its current pace, will you reach profitability before your runway hits zero? If yes, you are Default Alive. If not, you are Default Dead, meaning you must either cut expenses, increase revenue faster, or raise more capital.