How this number is made
Runway is cash divided by monthly net burn. Net burn is spending minus revenue. If revenue covers spending, the burn is zero and the runway is not a number of months.
- Cash is what you can spend, not booked revenue.
- Net burn is the average month you are actually having, not the month you hope for.
Formula
Runway in months = cash ÷ net burn.
Worked example
With the figures already in the form, months of runway is 7.2.
Questions
Should I use gross burn?
Gross burn ignores revenue and makes the runway look shorter. Net burn is the one that matches the bank account. If revenue is unreliable, use a burn closer to gross.
What about a raise?
Do not include money you have not closed. Runway is a fact about the cash you have.