Interactive tool
Calculate Your SaaS Runway.
Enter your current cash, burn, revenue, and growth assumptions to estimate how many months of runway you have before the next financing decision.
Move the sliders to see how hiring, growth, and margin change the answer.
Runway report
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Next decision
Runway Is Only Useful If It Changes the Next Decision.
Offset Partners helps SaaS and AI founders connect runway, burn, hiring, revenue, and fundraising timing into a finance operating cadence.
Direct answer: Cash runway is cash on hand divided by monthly net burn, where net burn is operating expenses minus the gross profit your revenue produces. Most SaaS companies should hold 18 to 24 months after a raise and start the next raise with at least 9 months left. Use the calculator above to model your own scenario, then pair it with fractional CFO support for SaaS runway planning when the answer starts driving hiring or fundraising decisions.
How to calculate cash runway
The formula is one line:
Runway (months) = Cash on hand ÷ Monthly net burn
Net burn is where founders get it wrong. It is not expenses minus revenue. It is:
Monthly net burn = Operating expenses excluding cost of revenue + New hiring costs - (Revenue × Gross margin)
Two things in that line trip people up.
The gross margin term matters. Revenue does not arrive as free cash, because delivering it costs money: hosting, compute, support, payment processing, implementation. Only the gross profit is available to cover payroll, rent, and everything else. Subtracting all of revenue assumes delivery is free, and overstates runway.
The operating expense term has to exclude cost of revenue, for the same reason. Your delivery costs are already accounted for inside the gross margin percentage. Counting them again in operating expenses subtracts them twice and understates runway. Put hosting, compute, and support into the margin, not into opex.
For traditional SaaS, where gross margins commonly sit in the mid-seventies to mid-eighties, the error is small but real. For AI companies it is larger, because inference and compute push margins well below that: ICONIQ’s benchmarking puts AI-native gross margin near 41 percent in 2024, rising through the mid-forties in 2025 toward roughly 52 percent in 2026, and published ranges across the sector run anywhere from about 40 to 60 percent depending on how much of the stack is bought rather than built. Halve the margin and you roughly double the size of the mistake. If compute is a material part of your cost base, get the margin right first: how AI startups should track compute costs covers what belongs in cost of revenue and what does not.
A worked cash runway example
Take the calculator’s default scenario:
| Input | Value |
|---|---|
| Cash on hand | $750,000 |
| Monthly operating expenses, excluding cost of revenue | $180,000 |
| Monthly revenue | $60,000 |
| Gross margin | 75% |
| Planned monthly hiring increase | $10,000 |
| Monthly revenue growth | 4% |
| Monthly expense growth | 1% |
Gross profit is $60,000 × 75% = $45,000 per month.
Net burn is $180,000 + $10,000 - $45,000 = $145,000 per month.
Runway is $750,000 ÷ $145,000 = 5.2 months, meaning cash reaches zero during month 6.
Had this company subtracted revenue instead of gross profit, it would have calculated a net burn of $130,000 and a runway of 5.8 months. That is 18 extra days that do not exist, and 18 days is often the gap between raising on your terms and raising on someone else’s.
The calculator above returns the same 5.2 months from these inputs. It runs the arithmetic month by month rather than as a single division, so the growth rates in the last two rows change the shape of the decline, but on this scenario they barely move the answer.
Treat any runway figure as indicative. It assumes collections arrive on time and no one-off costs land, neither of which survives contact with a real quarter. It is a planning range, not a date.
Gross burn vs net burn
Both numbers matter, and they answer different questions.
| Gross burn | Net burn | |
|---|---|---|
| Definition | Total cash out per month, including cost of revenue | Total cash out less the cash revenue brings in |
| Answers | How exposed are we if revenue stops? | How long does our cash last? |
| In the example above | $205,000 | $145,000 |
| Used for | Downside planning, churn stress tests | Runway, board reporting, investor updates |
The example’s gross burn is $205,000 because it includes the $15,000 of cost of revenue implied by a 75 percent margin on $60,000 of revenue, on top of $180,000 of operating expenses and $10,000 of new hiring. Subtract the $60,000 of revenue and you are back to $145,000 of net burn. The two figures should always reconcile that way, and if yours do not, one of them is built on a different definition of expenses.
Investors ask for net burn because it determines the funding gap. Read gross burn alongside it, because it shows what you would face if a large customer churned or a payment cycle froze. A company with $205,000 of gross burn and $145,000 of net burn is not 29 percent safer than it looks. It is one concentrated customer away from the higher number.
How much runway should you have?
The honest answer changed recently, and most advice has not caught up.
| Stage | Target runway after a raise |
|---|---|
| Pre-seed | 18 months minimum, 24 if the product is not yet in market |
| Seed | 24 months, because the next round is further away than it used to be |
| Series A | 24 months, with a credible path to profitability if it is not raised |
| Bootstrapped | 6 to 12 months of net burn held as a buffer, since there is no round to reach |
Those targets are our judgment, not a published dataset. Most guides still say 12 to 18 months. Here is why we think that is now too short.
The old rule of thumb was 18 months: enough to build for a year and raise for six months. That assumed the next round arrived on schedule. It does not.
- Most companies do not reach the next round inside two years. Carta’s Peter Walker reported in February 2025 that of the companies raising a seed round in 2022, only around 17 percent had reached a Series A within two years. In a normal year, which he takes to be 2018, the figure was 25 to 30 percent. Planning as though you are in the 17 percent is a choice, not a forecast.
- And those that do graduate now wait longer. Carta’s Q2 2025 Series A report put the median interval at 616 days, a little over 20 months, for the companies that raised that quarter. That figure counts only the survivors, so it understates the wait facing a company still trying.
The implication is uncomfortable but simple: an 18-month plan no longer reaches the next round. It reaches a bridge conversation. Companies that raise for 24 months and hit their milestones early keep the option to raise from strength. Companies that raise for 18 months hand the timing decision to the market.
When to start raising
Start when you have at least 9 months of runway left, and closer to 12 for a Series A.
The reason is arithmetic, not superstition. In our experience a seed round takes 3 to 6 months from first meeting to cash in the bank, and a Series A more often 6 to 9, longer when diligence surfaces problems in the books. Published estimates vary widely and there is no authoritative dataset, so treat these as our working assumptions rather than benchmarks, and lengthen them if your last raise took longer. Open a seed raise at 9 months and a normal process still leaves a buffer. Open a Series A at 9 months and a normal process leaves almost none, which is why 12 is the safer trigger for that round.
The buffer is the whole point. Starting at 6 months means the deadline is visible to every investor in the room, and terms move accordingly. We have not seen a credible dataset putting a number on how much worse those terms get, and you should be suspicious of anyone who quotes one. The mechanism is enough: a fund negotiating against your cash-out date has no reason to hurry.
Work backwards from that. If you want to open the raise at month 9, the finance work that supports it, meaning clean books, a defensible ARR bridge, and a model you can hold up in diligence, needs to start around month 12. That preparation window is what the SaaS finance readiness checklist is designed to test.
What your runway number means
A runway result sorts into four bands, and each one implies a different job.
6 months or less
- Cash planning takes priority over growth planning.
- Freeze new hiring commitments and chase collections.
- Assume the raise happens under pressure, and plan a downside case.
7 to 12 months
- This is the decision window: what you commit to now sets the terms of the raise.
- Pressure-test the hiring plan against a slower revenue ramp.
- Reporting needs to be diligence-ready inside 90 days.
13 to 18 months
- Enough room to fix the numbers before anyone tests them.
- Focus on gross margin visibility and close discipline.
- Build the metrics history investors will ask for.
19 months or more
- Time to build a finance cadence rather than a fundraising scramble.
- Watch the burn multiple, meaning net burn divided by net new ARR, not just the runway.
- Long runway with weak efficiency reads as time without progress.
Why SaaS runway numbers are often wrong
A runway figure is only as good as the cash and burn behind it. Four distortions show up repeatedly in SaaS books. The first one hides itself, which is why we lead with it.
Direct costs sitting in operating expenses
Across the last 7 SaaS engagements in the twelve months to July 2026 where we took over books kept by someone else, 5 had hosting, compute, or support costs sitting in operating expenses rather than cost of revenue. Correcting the classification moved reported gross margin by 5 to 9 percentage points.
The dangerous part is that the runway number usually survives. Pull both your operating expenses and your gross margin from the same incorrect profit and loss statement and the two errors offset almost exactly, so the burn figure comes out right and nothing looks broken. That is precisely why the error persists: the number founders use to sanity-check the books is the one number the mistake does not touch.
What does not survive is everything the margin feeds. The pricing decisions you make believing you run an 84 percent margin when it is 75. The forecast, where the gap compounds as revenue grows: at $150,000 of monthly revenue, a 9-point overstatement is $13,500 a month of gross profit that does not exist. And the gross margin an investor restates in diligence, which is the worst moment to learn the number was never yours.
The remaining three distortions are cruder, and they move the runway figure directly.
Cash collected up front is treated as spending room. Annual contracts billed in advance put twelve months of cash in the bank against a service you still owe. The balance is real, but part of it is a liability. Companies that read the full balance as surplus tend to over-hire, then discover the shape of the problem when renewals cluster in the same quarter.
Committed spend is missing. Signed offer letters, annual software contracts, cloud commitments, and contractor agreements are cash obligations before they are expenses. A runway model built only from last month’s actuals misses them.
Collections are assumed, not modelled. Booked revenue is not collected cash. If receivables are stretching, the model shows gross profit arriving on time while the bank account disagrees.
The first two are accounting problems, and they are the reason runway conversations often turn into cleanup conversations. If your monthly reporting cannot reliably separate COGS from opex or produce a deferred revenue schedule, SaaS controller services fix the input before the model is worth running.
What actually extends runway
Ranked by how quickly they change the number:
- Slow or defer hiring. Payroll is the largest and most compounding cost in most SaaS companies. Deferring two hires by a quarter often buys more runway than any other single decision, and it is reversible.
- Fix collections and payment terms. Moving from net 60 to net 30, or from monthly to annual billing with a discount, converts existing revenue into earlier cash without selling anything new.
- Cut non-headcount spend. Unused software seats, redundant tooling, and over-provisioned infrastructure are rarely the largest line but are among the fastest to address, usually within weeks and without touching the team.
- Improve gross margin. Model selection, caching, committed-use discounts, and pricing changes all move the gross profit term in the burn formula. Slower than the levers above, but permanent.
- Grow revenue. The most durable lever and the slowest, which is why it rarely rescues a company already inside 6 months.
Note the ordering. Founders instinctively reach for growth, which is the right long-term answer and the wrong short-term one. Inside a tight window, the levers that work are the ones you control directly.
Does Your Runway Number Look Wrong?
Offset Partners reviews your cash, burn, gross margin, and hiring plan in one diagnostic, then tells you whether the number is a finance problem, an accounting problem, or a timing problem.
Sources
Market figures on this page, with the date each was published. Reviewed July 2026, next review January 2027.
- Graduation rates, around 17 percent for the 2022 seed cohort against 25 to 30 percent in 2018: Carta, Graduation rate from seed to Series A, Peter Walker, 5 February 2025. Figures quoted as Carta states them, in round terms rather than to the decimal.
- Median interval of 616 days for Q2 2025 graduates: Carta, Series A funding in Q2 2025 (September 2025).
- Burn multiple grading: David Sacks, The Burn Multiple, Craft Ventures (2020).
- Gross margin ranges, SaaS and AI: ICONIQ Growth’s SaaS and AI benchmarking, 2024 to 2026. Sector estimates diverge, so we publish the range rather than a single figure.
- Raise durations, 3 to 6 months at seed and 6 to 9 at Series A: our working assumptions from client engagements, not published benchmarks. No authoritative dataset exists and published estimates vary widely.
- Gross burn and net burn definitions are standard usage, not a proprietary framework.
The classification finding, 5 of 7 engagements and a 5 to 9 point margin correction, is Offset Partners’ own data. Population: SaaS engagements in the twelve months to July 2026 where we took over books previously kept by someone else. It is a small sample and we report it as one, with the raw counts rather than percentages.
Runway targets by stage, the 9 and 12 month raise triggers, and the remaining three distortions are Offset Partners’ guidance based on client work, not published benchmarks. We flag the difference deliberately, because runway advice that presents judgment as data is how founders end up planning to the wrong number.
Related resources
- Bookkeeper vs controller vs CFO: which finance role does your SaaS startup need?
- Controller vs CFO for a SaaS company
- What is a fractional CFO for a SaaS startup?
- SaaS finance readiness checklist
- SaaS chart of accounts template
Related services
- Fractional CFO services for SaaS companies
- Controller services for SaaS reporting
- Book a SaaS finance diagnostic
FAQs
How do you calculate cash runway?
Divide cash on hand by monthly net burn. Net burn is monthly operating expenses excluding cost of revenue, plus planned hiring, minus the gross profit your revenue produces. Subtract gross profit rather than revenue, and keep delivery costs out of the operating expense figure so they are not counted twice. A company with $750,000 in cash, $180,000 of operating expenses, $10,000 of planned monthly hiring, and $60,000 of monthly revenue at a 75 percent gross margin burns $145,000 per month and has roughly 5.2 months of runway.
What is the difference between gross burn and net burn?
Gross burn is total cash going out each month, including cost of revenue, ignoring what comes in. Net burn is gross burn less the cash your revenue contributes, so gross burn minus revenue equals net burn. Net burn drives runway and is the number investors ask for. Gross burn is the worst-case figure, because it shows what you would face if revenue stopped tomorrow. Track both, since a company with high gross burn and low net burn is far more exposed to churn than its runway suggests.
Should revenue or gross profit be subtracted when calculating burn?
Gross profit. Subtracting all revenue assumes it costs nothing to deliver, which overstates runway. If a SaaS company bills $60,000 a month at a 75 percent gross margin, only $45,000 is available to cover operating costs. Using revenue instead of gross profit would overstate runway by roughly 12 percent in that example, and considerably more for AI companies where compute pushes gross margin closer to 50 or 60 percent.
How many months of runway should a startup have?
Plan for 18 to 24 months after a raise, and treat 24 months as the target rather than the ceiling. The old 18-month rule assumed you could raise the next round on schedule. Carta reported in February 2025 that only around 17 percent of the 2022 seed cohort reached a Series A within two years, against 25 to 30 percent in a normal year, and its Q2 2025 report put the median interval at 616 days for those that did graduate. An 18-month plan therefore no longer reliably reaches the next round without a bridge.
When should a SaaS startup start fundraising?
Start with at least 9 months of runway remaining, and closer to 12 if the round is a Series A. A seed round commonly takes 3 to 6 months to close and a Series A more often takes 6 to 9, so opening at 9 months leaves a buffer at seed and almost none at Series A. Starting at 6 months or fewer makes your cash-out date visible to every investor in the room, and a fund negotiating against that date has no reason to hurry.
Does cash collected up front make runway look better than it is?
Yes, and this is the most common distortion in SaaS runway numbers. Annual contracts billed up front put a year of cash in the bank while the revenue is earned over 12 months. The cash balance is real, but part of it is an obligation to deliver service rather than surplus. Companies that read that balance as spending room tend to over-hire and discover the problem when renewals cluster.
What actually extends runway fastest?
In order of speed: slowing or pausing planned hiring, fixing collections and payment terms, cutting non-headcount spend, and improving gross margin. Hiring is the fastest lever because payroll is the largest and most compounding cost in most SaaS companies, and a deferred hire changes burn immediately. Revenue growth is the slowest lever, which is why it rarely rescues a company already inside 6 months.
How often do SaaS books misclassify direct costs, and does it change runway?
Often. Across the last 7 SaaS engagements Offset Partners took over from another bookkeeper in the twelve months to July 2026, 5 had hosting, compute, or support costs sitting in operating expenses rather than cost of revenue, and correcting it moved reported gross margin by 5 to 9 percentage points. The runway figure itself usually survives, because pulling both operating expenses and gross margin from the same incorrect statement makes the two errors offset. What breaks is the pricing decisions, the forecast, and the gross margin an investor restates in diligence.
Is runway the same as the burn multiple?
No. Runway measures how long the cash lasts. The burn multiple measures how efficiently the cash buys growth, calculated as net burn divided by net new ARR over the same period. David Sacks of Craft Ventures, who introduced the metric, grades it as: under 1x amazing, 1x to 1.5x great, 1.5x to 2x good, 2x to 3x suspect, and above 3x bad. A company can have long runway and a poor burn multiple, which reads to investors as time without progress.