Worked example
These values come from the default scenario in the calculator: $500,000 of cash, $40,000 of monthly burn, $10,000 of MRR growing 5% a month against 1.5% churn, plus a hire in month 4 and a marketing expansion in month 6.
| Net revenue growth per month | 3.5% |
|---|---|
| Month 1 net burn | $29,650 |
| Runway remaining | 11.1 monthsinterpolated inside the month cash hits zero |
| Zero cash month | Month 12 |
| Default alive | Not on this path |
| Peak cash deficit | $1,306,482capital needed to survive the full horizon |
| MRR at month 48 | $52,136 |
The formulas
48 month simulation
Applied identically for t = 1 to 48. Month 0 is today and carries no growth or events.
- 01
Net monthly growth is growth minus churn, floored at minus one so revenue can never turn negative.
- 02
Revenue compounds on the previous month.
- 03
Recurring expenses inherit every expense event scheduled for this month.
- 04
Net burn is recurring expenses minus revenue, and it can be negative.
- 05
Cash carries forward, less net burn, plus any one time injections.
- 06
The first month with a non positive balance is the zero cash month m.
Runway is interpolated inside month m, so the answer is not a rounded up month count:
Injections are added at month end, so the interpolation above only ever runs on a positive balance and a positive burn.
Assumptions and caveats
- Month 0 is todayThe first row is the run rate you entered, with no growth and no milestone events applied.
- Growth and churn are nettedRevenue compounds at the difference between growth and churn. Twenty percent growth against eighteen percent churn is nearly flat, and the model says so.
- Expense events are permanentHiring in month 4 adds to every month after it. Cost cuts work the same way in reverse.
- Injections land onceA grant or bridge round is added at the end of its month and never repeats.
- Zero cash is interpolatedThe model does not round up to a comfortable month. If you run out on the 18th, the runway figure reflects that.
- No taxes, working capital or seasonalityThis is a board level approximation built for decisions, not a statutory cash flow statement.
Glossary
- Runway
- Months of operating life left before cash reaches zero on the current trajectory. Reported here as a fractional month, because "18 months" and "18.9 months" are very different board conversations.
- Gross burn
- Total recurring monthly operating expense before any revenue: payroll, rent, software, contractors. The starting cost base that milestone expense events adjust.
- Net burn
- Recurring expenses minus revenue for the same month. If negative, the company generates more than it spends and cash grows.
- Zero cash date
- The calendar date the bank balance hits zero, derived from the fractional runway month so it is a date you can plan a raise around.
- Default alivealso: default dead
- Reached when revenue covers recurring expenses on the current growth path, so the business survives without further capital. The counterpart is default dead, a company that needs a future round it has not raised.
- MRR churn
- Monthly revenue lost to cancellations and downgrades, expressed as a percentage of the base. Churn is netted against growth, so 20% growth with 18% churn is nearly flat.
- Step function expense
- A permanent change to the recurring cost base from a specific month: a hire, an office, a tool contract ending. Modelled as an additive delta applied to every following month.
- One time injection
- A single non recurring cash inflow such as a grant, a bridge round or a tax refund. Added once, at month end, and never repeated.
- Peak cash deficit
- The largest negative balance across the horizon: literally the extra capital required to survive all 48 months without changing course.
This model vs. the rule of thumb
| Question | Standard rule of thumb | What this model does | Why it changes the answer |
|---|---|---|---|
| Runway formula | Cash divided by net burn | Month by month simulation with compounding revenue | Linear division assumes revenue growth and hires never happen, which overstates runway for growing companies and understates it for companies about to hire. |
| Revenue | Constant MRR | Compounds at max(-100%, growth minus churn) each month | Churn compounds too. Netting growth and churn is what separates a flat line from a curve that crosses your burn rate. |
| Expenses | One flat number | Step function events at the month you schedule them | Hiring is lumpy. A single $18,000 event moves your zero cash date by months, and that is exactly the decision being modelled. |
| Downside case | Change one input and lose the previous version | Every scenario is a shareable URL, so base, aggressive and downside sit side by side | Board conversations need three scenarios, not one. Share links make each version reproducible instead of a forgotten spreadsheet tab. |
| Capital need | Not answered | Peak cash deficit across the horizon | Knowing your runway is half the answer. Knowing the exact shortfall to reach a target month is what sizes a bridge. |
Frequently asked questions
What counts as runway in this model?
Runway is the number of months until your cash balance reaches zero, given your current cash, your recurring expenses and your revenue trajectory. Unlike a simple cash divided by net burn calculation, this model compounds revenue month over month, nets churn against growth, and applies every milestone event on the month you schedule it. The result is reported to one decimal place, interpolated inside the month the balance crosses zero.
Why is my runway different from cash divided by net burn?
Because cash divided by net burn assumes both revenue and expenses stay frozen forever. On a real startup path revenue compounds and expenses step up when you hire. A company burning $30,000 a month against $10,000 of MRR looks like 25 months of runway, but a single $18,000 hiring step in month four cuts that to roughly 18. The chart shows exactly where each step event bends the curve.
What does default alive mean here?
Default alive is the month where monthly revenue first covers recurring expenses, so the company survives on its own trajectory without another raise. A business that is not default alive is dependent on future capital, even if it is currently well funded. The model also reports the month from which profitability is sustained through the end of the horizon, which differs when a later milestone adds expenses back.
How often should I re model before a fundraise?
Monthly is the normal cadence, and immediately after any hiring decision, pricing change or bridge. Because every input lives in the URL hash, you can snapshot a specific scenario by copying the link and keep the previous version next to it. Two or three live scenarios, a base case, an aggressive hiring case and a downside case, are usually enough to hold a board conversation.
Do milestone expense changes repeat every month?
Yes. An expense event is a permanent step change to your recurring cost base: add $18,000 for two engineers in month four and every subsequent month carries that $18,000. A one time cash injection is different: a grant or bridge round is added once, at the end of its month, and never repeats. The event type selector switches between these two behaviours.
Can I model a bridge round that lands before I run out of cash?
Yes. Add a one time injection on the month you expect the money, and the model will show the balance recovering, the new zero cash date and the revised runway. If the injection is too late the chart shows the balance crossing zero first, which is exactly the situation a bridge is meant to prevent.
How do I export a runway model for a board deck?
Use the PDF button to open the print dialog with a dedicated print stylesheet: navigation, inputs and marketing copy are stripped, leaving a deal memo with key results, the full assumption list and methodology notes. It is a vector PDF, so the chart stays sharp at any zoom. The CSV button downloads every monthly row for a spreadsheet model or a data room.