How Startup Runway Calculator works

1. Scope

The Startup Runway Calculator projects months until cash hits zero, given a starting balance, a monthly burn, and optional revenue with a compounding growth rate. It is deterministic — one scenario at a time — and does not model fundraising probability, dilution, or non-operating cash movements (debt repayments, tax refunds, asset sales).

2. Inputs and outputs

Inputs: cash_on_hand, monthly_burn (gross costs — revenue is separate), monthly_revenue, revenue_growth_pct (month-over-month compounding), burn_reduction_pct (month-over-month cost cutting; the tool cannot model rising burn). Outputs: runwayMonths (capped at 120 and reported as "120+ months" if cash never depletes), a per-month projection (cash, revenue, burn, net burn), and breakEvenMonth (the first month revenue ≥ burn, or null within the horizon).

Engine source: src/lib/startup-runway/engine.ts.

3. Formula / scoring logic

for m = 1..120:
  revenue_m   = revenue_0 * (1 + revenue_growth_pct/100) ^ (m-1)
  burn_m      = burn_0    * (1 - burn_reduction_pct/100) ^ (m-1)
  net_burn_m  = burn_m - revenue_m          // no floor; can go negative
  cash_m      = cash_{m-1} - net_burn_m
stop when cash_m <= 0   -> runway_months = m   (else "120+ months")

4. Assumptions

• Constant compounding growth for revenue and burn. Real trajectories show ramp → linear → plateau. The tool is accurate for the first 6–12 months of a stable growth regime; past that, the projection is optimistic.
• Cash equals P&L. No AR/AP timing, no deferred revenue, no receivable aging. For accrual-to-cash conversion, deflate revenue by expected collection days.
• No zero floor on net burn. Once revenue exceeds burn, net burn goes negative and cash accumulates in the projection — the tool models both depletion and recovery.
• Horizon caps at 120 months. Businesses that never hit cash-out within 120 months are reported as "120+ months", not runway-infinite.
• No taxes, distributions, or dividends. For a profitable projection, add a flat tax line to the monthlyBurn input.

5. Data sources

• First Round State of Startups 2023 — burn and runway percentiles by stage.
• SaaS Capital Annual Survey — bootstrapped and capital-efficient SaaS benchmarks.
• US Small Business Administration — manage your finances — cash-flow planning reference.

6. Known limitations

• Compounding-growth optimism past 12 months. A monthly growth rate of 10% compounds to 3.1× in a year and 9.6× in two. Real businesses rarely sustain this — treat long-horizon outputs as best-case only.
• No ramp-and-plateau curve. To model ramp, run the tool twice: months 1–6 with the ramp rate, then start over at month 7 with a lower steady-state rate.
• No fundraising timing. If the plan assumes a Series A closes "in Q3", the tool cannot verify that. Build a pre- and post-round scenario.
• No scenario fan chart. Best/base/worst comparison requires three runs. We intentionally don't bundle Monte Carlo — the inputs aren't stable enough to justify the false precision.
• Non-cash burn (stock-based compensation, deferred payroll) is out of scope. Add it manually to monthlyBurn if material to the decision.

7. Reproducibility

8. Change log

• 2026-04-24methodology page first published.

Worked example

Run live against the same engine this site ships (/engines/startup-runway-calculator.js). The inputs and outputs below are recomputed on every build and independently re-verified in CI — they are never hand-authored.

Frequently asked questions

What does the Startup Runway Calculator calculate?

Projects months of runway from cash, monthly burn, and revenue growth assumptions. Deterministic projection — it does not quantify fundraising probability or model dilution.

What inputs does the Startup Runway Calculator need?

It takes 5 inputs: cash_on_hand, monthly_burn, monthly_revenue (default 0), revenue_growth_pct (default 0), burn_reduction_pct (default 0). Outputs returned: runwayMonths, monthlyProjection, breakEvenMonth.

What formula does the Startup Runway Calculator use?

The exact computation is: for m = 1..120:; revenue_m = revenue_0 * (1 + revenue_growth_pct/100) ^ (m-1); burn_m = burn_0 * (1 - burn_reduction_pct/100) ^ (m-1); net_burn_m = burn_m - revenue_m (no floor; can go negative); cash_m = cash_{m-1} - net_burn_m; stop when cash_m <= 0

Can I verify the Startup Runway Calculator with a worked example?

Yes. With cash_on_hand = $500,000, monthly_burn = $40,000, monthly_revenue = $10,000, revenue_growth_pct = 10, burn_reduction_pct = 0. the tool returns breakEvenMonth = 16, runwayMonths = "120+ months" — revenue growth overtakes flat burn before the cash bottoms out, so cash never hits zero within the horizon.

Where does the Startup Runway Calculator get its benchmark data?

Reference data is sourced from: First Round State of Startups 2023 (as of 2023); SaaS Capital Annual Survey (as of 2024).

What can the Startup Runway Calculator not tell me?

Known limitations: Constant-growth is optimistic past 12 months. Use staged scenarios for longer horizons. Does not model round timing or closing risk. A fundraise pitched as "6 months away" can easily slip 3 more.