Calculating runway correctly
Basic formula: cash on hand ÷ net monthly burn. Net burn = average monthly cash outflow minus average monthly revenue. Use 3-month or 6-month trailing averages, not a single month, because expenses are lumpy (quarterly tax payments, annual software renewals, hiring spurts) and revenue (especially for B2B) is rarely smooth.
Adjust for known future changes: a planned hire next month adds €8–12k to monthly burn; a customer contract signed but not yet billed adds revenue from the start month, not when paid. A planned office move, marketing push or product launch all bend the runway curve. Build a 12-month bottom-up cashflow rather than relying on the simple division.
Gross vs net burn: why both matter
Gross burn measures the total cash going out each month — salaries, rent, software, marketing, contractors, everything. Net burn subtracts cash coming in from customers. For an early startup with limited revenue, the two are close. As revenue grows, the gap widens.
Runway should be calculated on net burn — that's the rate at which cash is actually depleting. But investors increasingly want gross burn too, because it shows what happens if revenue dips: a startup with €100k gross burn covered by €70k MRR has net burn of €30k. Lose two key customers and net burn jumps to €60k, halving runway overnight.
Runway and fundraising: the 24-month rule
European venture timelines have lengthened: average Series A to Series B is now 22–28 months (vs 18–22 in 2019–2021), and fundraising itself realistically eats 3–6 months (warm intros, pitches, term sheet, diligence, legal). Investors expect a startup raising a round to have 4–6 months runway minimum at signing — anything less and you're seen as desperate, weakening valuation and terms.
So a healthy plan from a closing Series A is: 24 months total runway, with fundraising kicking off at month 18 and closing at month 22–23. That leaves 24 months of growth time, 4 months of buffer at signing, and a credible position throughout. Startups operating on 12-month plans inevitably end up raising at distress — usually at 30–50% lower terms than they could have commanded six months earlier.
Calculate your real runway
Enter cash, monthly costs and revenue — the EuroCalc runway calculator shows current runway, fundraisable runway, and the impact of likely hiring or revenue changes.
Open the calculator →Frequently asked questions
What if my revenue is growing fast? Should I extend runway?+
Growth typically improves runway over time (net burn shrinks as revenue catches up to costs). But projections often miss — recalculate monthly with actuals, and only consider runway 'extended' once revenue is consistent for 3+ months.
Should I cut staff to extend runway?+
If revenue isn't growing and runway is under 12 months, almost always yes — and faster than feels comfortable. Investors evaluate decisiveness in tough markets. Half-measures that just delay the inevitable are worse than a clean 15–25% reduction.
Is debt a way to extend runway?+
Venture debt can add 6–9 months but typically requires existing equity backing and adds covenants. Bank lines of credit are largely unavailable for unprofitable startups. Revenue-based financing works for steadily growing SaaS but caps growth flexibility.
How does seasonality affect runway?+
Run two scenarios — peak quarters (sales-heavy retail, year-end software renewals) and trough quarters. Cash flow planning matters more than runway in seasonal businesses; the average can hide a serious low point.
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