Burn Rate vs Runway: Startup Cash Planning
Burn rate measures how quickly cash is spent. Runway estimates how long existing cash can support that burn.
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Use burn rate to measure monthly cash consumption. Use runway to estimate the number of months before cash is exhausted.
Burn rate helps diagnose cost structure and fundraising pressure.
Runway converts burn into a planning timeline for hiring, fundraising, and spending control.
Runway changes whenever revenue, expenses, or cash balance changes. Treat it as a rolling planning metric.
Monthly burn to runway
A company with $900,000 in cash and $150,000 net monthly burn has roughly six months of runway. If it reduces burn to $100,000, runway extends to nine months before considering growth or financing.
Key Metrics
Common Mistakes
Frequently Asked Questions
How much runway is healthy?
Many startups target 12 to 18 months, but the right buffer depends on growth stage, market conditions, and fundraising access.
Should revenue be included?
Yes for net burn. Gross burn focuses on expenses before revenue.
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