Burn and runway tracking shows how much cash a Company spends each month and how many months it can operate before it needs new capital or break-even performance.
Key Takeaways
- Burn and runway determine fundraising timing. A founder who does not know runway cannot run a disciplined Round.
- Track gross burn, net burn, cash balance, runway, committed revenue, hiring plans, and planned spend changes.
- Use the same definitions in the financial model, Investor Updates, and Data Room so Investors do not find inconsistencies.
Track Burn And Runway
- 01. Cash BalanceRecord month-end cash balance from the source account or finance system.
- 02. Gross BurnTrack total cash outflow before receipts.
- 03. Net BurnTrack cash outflow after revenue and other cash receipts.
- 04. RunwayCalculate months of runway using current cash divided by monthly net burn.
- 05. Revenue TrendShow whether revenue is shrinking burn or masking spend growth.
- 06. Hiring PlanSeparate current burn from planned burn after hiring.
- 07. One-Time CostsCall out legal, hardware, launch, or migration costs that distort monthly burn.
- 08. Round TimingSet a fundraising start date before the runway becomes uncomfortable.
Quick Reference
| Metric | Formula | Why Investors Care |
|---|---|---|
| Gross Burn | Total monthly cash outflow | Shows operating cost base |
| Net Burn | Cash outflow minus cash receipts | Shows how fast cash is shrinking |
| Runway | Cash balance divided by net burn | Shows financing urgency |
| Planned Burn | Current burn plus approved future spend | Shows whether the model matches the hiring plan |
Tracker Columns
Month
Opening Cash
Cash Receipts
Payroll
Software And Tools
Sales And Marketing
Operations
One-Time Costs
Gross Burn
Net Burn
Closing Cash
Runway In Months
Notes
FAQ
What is a healthy runway before fundraising?
Many founders try to start a Round with enough runway to avoid negotiating from distress. The right number depends on stage, market, and capital needs, but waiting until the final months creates risk.
Should founders report gross burn or net burn?
Track both. Gross burn shows cost discipline; net burn shows cash survival.
What causes runway tracking mistakes?
Common mistakes include ignoring planned hires, mixing accrual and cash views, and failing to separate one-time costs.