Burn rate, runway, and the number that buys you time
Burn rate is how fast you spend cash; runway is how long that cash lasts. Here's how to calculate both, what counts as healthy, and the two levers that move your runway most.
Gross burn vs. net burn
Gross burn is your total monthly spend — payroll, infrastructure, rent, marketing, all of it. Net burn subtracts revenue, and it's the number that actually drains your bank account. Runway is built on net burn, because revenue offsets some of what you spend each month.
Net burn = Monthly expenses − Monthly revenue
Cash runway = Cash on hand ÷ Net burn
Spend $80,000 a month against $50,000 of revenue and your gross burn is $80,000, net burn $30,000. With $500,000 in the bank, that's about 16.7 months of runway. The calculator above also factors in revenue growth — as revenue compounds, net burn shrinks and runway stretches past the flat estimate.
What counts as a healthy runway
The rule of thumb is 18–24 months of runway, especially right after a raise — enough to hit the milestones that justify the next round. Under 12 months is the signal to act; under 6 is critical.
The burn multiple
Popularized by Bessemer, the burn multiple grades how efficiently you turn cash into growth: net burn ÷ net new ARR over the same period. It answers “how much do we burn for each dollar of new ARR?” In a tighter funding market, efficient growth is what investors weigh — not the growth rate alone.
The cheapest way to extend runway
You can always cut to the bone, but the two levers that move net burn without gutting the company both run through customer support. Support headcount scales with ticket volume — an AI agent that resolves routine questions instantly lets the same team cover far more volume, holding the line on expenses. And slow support is a leading preventable cause of churn: every customer you lose is revenue you have to re-earn just to keep runway flat. See how Selvo's AI agent does both.
