AI Skill Report Card
Calculating Burn Rate Runway
Burn Rate & Runway Calculator
Quick Start
Python# Basic runway calculation monthly_burn = 50000 # Monthly expenses - revenue current_cash = 500000 runway_months = current_cash / monthly_burn print(f"Current runway: {runway_months:.1f} months") # Scenario planning scenarios = { 'conservative': {'burn': 60000, 'growth': 0.05}, 'realistic': {'burn': 50000, 'growth': 0.15}, 'optimistic': {'burn': 40000, 'growth': 0.25} }
Recommendation▾
Add more concrete input/output examples showing actual numbers and calculations for different startup stages (seed, Series A, etc.)
Workflow
Progress:
- Gather current financials (cash, monthly revenue, expenses)
- Calculate baseline burn rate and runway
- Model 3 scenarios (conservative/realistic/optimistic)
- Factor in growth assumptions and hiring plans
- Add milestone-based cash needs
- Create fundraising timeline recommendations
Step 1: Baseline Analysis
- Current cash position
- Monthly recurring revenue (MRR)
- Fixed costs (salaries, rent, SaaS)
- Variable costs (marketing, COGS)
- Net burn = Expenses - Revenue
Step 2: Scenario Modeling
- Conservative: 20% higher burn, slower growth
- Realistic: Current trajectory maintained
- Optimistic: Revenue growth accelerates, burn optimizes
Step 3: Milestone Planning
- Map cash needs to key milestones
- Buffer for fundraising delays (6+ months)
- Account for seasonal variations
Recommendation▾
Include specific templates or frameworks for tracking these metrics (like a simple spreadsheet template or key formulas)
Examples
Example 1: SaaS Startup Input: $300K cash, $20K MRR, $45K monthly expenses
Burn rate: $25K/month ($45K - $20K)
Baseline runway: 12 months
Conservative scenario: 9 months (higher churn)
Optimistic scenario: 15 months (faster growth)
Fundraising deadline: Month 6
Example 2: Pre-Revenue Startup Input: $150K cash, $0 revenue, $35K monthly expenses
Burn rate: $35K/month
Runway: 4.3 months
Scenarios based on revenue timing:
- Launch in 2 months: 6-month runway
- Launch delayed 4 months: Need funding now
Recommendation▾
Expand the Quick Start with a complete worked example showing all steps from raw financial data to final recommendations
Best Practices
- Use 18-month minimum runway after fundraising
- Model burn rate changes with headcount growth
- Include one-time expenses (legal, equipment)
- Track leading indicators (CAC, LTV, churn)
- Update projections monthly
- Separate cash from committed funding
- Plan for 6+ month fundraising cycles
Common Pitfalls
- Underestimating fundraising timeline
- Not modeling seasonal revenue dips
- Ignoring working capital needs
- Over-optimistic revenue growth assumptions
- Forgetting taxes and one-time costs
- Not stress-testing with 20% scenarios
- Mixing committed vs. actual cash