01Gross burn, net burn and two runway answers
Gross burn is the operating cash leaving the business in a representative month. Net burn is gross burn minus operating revenue collected. If monthly expenses are $180,000 and collected revenue is $62,000, gross burn is $180,000 and net burn is $118,000. Financing is not operating revenue.
Static runway is current cash divided by current net burn. It is useful only as a flat-input shortcut. The dynamic model instead compounds revenue and expenses separately, applies planned hiring at its start month and adds scheduled financing only to cash. These are different answers and the calculator labels them separately.
With $1.8M cash and $118,000 of current net burn, static runway is 15.25 months. At 9% monthly revenue growth and 2% monthly expense growth, the default dynamic path reaches break-even before depleting cash.
02Cash depletion is not the same as break-even
Cash depletion occurs when the projected balance reaches zero. Operating break-even occurs when monthly revenue covers monthly operating expenses. A company can reach break-even with a substantial cash balance; that month is not a zero-cash date.
Default alive follows Paul Graham’s question: on the current expense and revenue-growth path, does the company reach profitability on the cash it has? This calculator requires durable operating break-even before depletion. If revenue grows more slowly than expenses, a temporary surplus is not treated as permanent safety.
- Default alive: durable operating break-even arrives while cash remains positive.
- Cash-flow positive: operations already generate cash and the entered growth path sustains that position.
- Funded break-even: the scheduled financing event is necessary to avoid depletion before break-even.
- Horizon-capped: cash remains at the model horizon, but durable break-even has not been established; this is not infinite runway.
03Hiring and financing stay explicit
Planned hires use a count, a fully loaded monthly cost per hire and a start month. After the start, that hiring cost follows the entered expense-growth rate. This makes the cash effect visible instead of hiding a future step-up inside an average.
A funding amount arrives in its scheduled month and increases cash only. It never increases revenue, reduces operating expenses or creates net-new ARR. If funding is required to reach break-even without depletion, the result says funded break-even rather than default alive.
The raise-by marker subtracts your selected fundraising lead time from a modeled depletion month. It does not predict that a round will close or that capital will be available.
04Target cash uses every interim balance
The target solver projects the full selected period, even if the unadjusted path would run out of cash earlier. Extra opening cash needed is the amount that keeps every monthly balance at or above zero through the target. Looking only at the final month would miss an interim shortfall followed by recovery.
The expense-cut solver finds the smallest uniform percentage reduction to the four entered operating-expense categories that meets the same target. It preserves their later growth and does not cut planned hiring. If cutting those expenses to zero is still insufficient, it reports that the target cannot be met by that lever alone.
05Burn multiple needs matching periods and recurring revenue
Burn multiple is net burn divided by net-new ARR over the same period. The optional forward proxy totals operating cash flows for 12 months and compares the resulting net burn with the change between starting and ending recurring-revenue run rate: net-new ARR = (month-12 recurring revenue − current recurring revenue) × 12.
The ratio remains N/A until you explicitly identify the entered revenue as recurring and net-new ARR is positive. This avoids dividing monthly burn by an unlabeled revenue increment or producing infinity when ARR does not grow. A forward proxy does not replace historical ARR and cash-flow reporting.
06Stress the path and keep the limitations visible
The comparison table recalculates the modeled path, flat revenue and expenses, a 20% cut to entered costs, 20% higher starting revenue and a zero-revenue stress. Every scenario uses the same outcome definitions, so a longer static number is not confused with survival on a changing path.
The model uses monthly cash averages and deterministic assumptions. It does not know invoice collection timing, seasonality, taxes, debt service, restricted cash or unentered one-time receipts and payments. Recalculate when actual cash, collections, hiring or financing changes.
Default example: durable break-even arrives in month 17 with about $624,467 cash remaining. There is no zero-cash date on that path; the separate 24-month target ends with about $1,404,002 cash.