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Cash Burn and Cash Runway
Cash Generated, or Cash Burn for companies not yet making a profit, refers to the amount of cash the company is either generating or using (“burning”) after taking into account revenue and covering its operating expenses, investments, and other cash outflows over a specific time period.
What is Cash Runway?
Cash Runway is the amount of time, at current Cash Burn run rate, until a company runs out of cash.
How is Cash Burn calculated?
Cash Generated, or Cash Burn, is calculated as the difference between the company’s cash inflows (such as sales revenue) and its cash outflows (such as product costs, operating expenses, research and development costs, etc.) over that period. Financing flows such as loans and investment are excluded, but ongoing financing costs such as interest expense are included.
For companies that are not yet covering their expenses, the Cash Burn rate is expressed as a negative value, representing the net cash outflow during a given period.
The formula is:
As in the above example, the current monthly rate of Cash Generated or Cash Burn is often generated using average data over the past year, to smooth out any one month anomalies in run rate.
How is Cash Runway calculated?
Cash Runway is generally expressed in number of months and is calculated as the amount of available cash divided by the current Cash Burn rate.
The formula is Cash in Bank, divided by Cash Burn, as shown below.
How are Cash Burn and Cash Runway used by SaaS companies?
SaaS companies, particularly those which are growing rapidly, generally burn cash rather than generate it. This is because the cost of acquiring each new customer is not recovered immediately after the customer is acquired. SaaS companies often prioritise growth and market penetration over short-term profitability and cash generation. Monitoring cash burn helps the company make the necessary decisions to ensure long-term viability.
Measuring payback time for acquiring new customers, or CAC Payback, is a key component of understanding Cash Burn rates. Read more about CAC Payback here.
For the full study behind these figures, see our SaaS cash burn benchmarks report.
Cash burn and runway benchmarks for 2026
Burn is best benchmarked two ways: how efficiently it converts into new revenue, and how many months of it you are expected to be holding. Both moved in 2026, and they moved in the same direction.
1.12x
Median burn multiple
51%
Burn more than $1 per $1 of new ARR
24%
Run below 0.33x
24–30
Months of runway now expected before a raise
The runway bar has roughly doubled
Months of runway investors expect before Series A outreach.
12–18
Prior cycle
24–30
2026 guidance
A company that would have been considered fundable with fifteen months of cash is now expected to hold closer to twenty-seven. The same burn rate that was acceptable two years ago now implies raising roughly twice as much, or cutting to make the existing balance stretch.
How the burn multiple is distributed
| Burn multiple | Share of companies | What it means |
|---|---|---|
| Below 0.33x | 24% | Under 33 cents of net burn per $1 of net new ARR. Exceptional capital efficiency. |
| 1.12x | the median | The typical cash-burning company spends slightly more than it adds in new ARR. |
| Above 1.0x | 51% | More than $1 burned for every $1 of net new ARR added. |
Just over half the sample sits above 1.0x. That is the line worth knowing: below it, growth is partly funding itself; above it, every additional dollar of ARR costs more than a dollar of cash to buy.
Two numbers, two different kinds of evidence
The 1.12x burn multiple is an observed median, drawn from 55 cash-burning private companies. It is a real measurement, but a small sample — treat it as directional rather than definitive, and expect it to move as coverage widens.
The 24–30 months is investor guidance, not an observed median. It is what Series A investors currently say they expect to see, not a measurement of what companies actually hold. No credible public 2026 dataset publishes runway quartiles by stage, so anyone quoting one should be asked where it came from.
Where the cash went instead
The market response to a higher runway bar shows up directly in the cost base. Across 342 B2B SaaS companies, R&D fell from 35% of revenue to 27% and sales and marketing from 37% to 35%, lifting the median Rule of 40 from 15 to 25. Almost none of that improvement came from faster growth. Burn was reduced deliberately, to buy the months investors now expect. See the Rule of 40 benchmarks →
Sources: runway expectations from CRV’s 2026 guidance on how Series A investors evaluate burn. Burn multiple distribution from The SaaS CFO’s 2026 analysis of 55 cash-burning private companies. Cost-base figures from the 2026 Aleph × Benchmarkit SaaS & AI Performance Benchmarks, 342 companies, full-year 2025 actuals.
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Turn cash burn into a clear runway.
ScaleXP combines your current bank balance, actual cash movements, working capital, budget and forecast to keep burn and runway visible without another spreadsheet.
Separate gross burn from net burn, exclude financing flows and calculate runway from the cash that is actually being depleted.
Automate Your SaaS MetricsExample connected cash-runway view
- Accounting: Xero · QuickBooks · Zoho Books
- Inputs: Cash balance · revenue · operating costs · forecast
Cash in bank
$1.2 million
The cash currently available to fund operations and future investment.
Illustrative example figures, not your live data.
Gross burn rate vs net burn rate
Two figures are both commonly called burn, and confusing them makes runway look better or worse than it is.
Gross burn rate is total company spending in a month: payroll, hosting, tooling, rent and every other operating cost. It ignores income entirely.
Net burn rate is gross burn minus monthly revenue. It is the figure that actually depletes cash reserves, and the one runway should be calculated from.
An early stage company with $180,000 of operating costs and $60,000 of monthly revenue has a gross burn rate of $180,000 and a net burn rate of $120,000. With $1.2m in the bank, quoting the gross figure implies under seven months of runway; the net figure gives ten.
What burn says about financial health
Burn on its own is neither good nor bad. A company spending heavily to capture a market can be in better financial health than one spending little and growing slowly. What matters is the relationship between burn, growth and the cash reserves behind it.
The practical test is whether current company spending buys enough growth to secure additional funding on better terms before the runway runs out. If it does not, the spend is buying time rather than progress.
Reducing burn without stalling growth
Reducing burn indiscriminately usually costs more than it saves. The sequence that tends to work:
- Separate operating costs that scale with customers from those that do not. The second group is where cuts hurt least.
- Look hard at monthly revenue quality before cutting sales. Slowing acquisition lowers burn now and lowers growth for several quarters afterwards.
- Renegotiate committed infrastructure and tooling annually. After payroll these are frequently the largest recoverable line.
- Model runway on net burn rate, and rerun it whenever monthly revenue moves materially.
Cash Burn Visualisation Examples
At ScaleXP, the leading SaaS metrics tool, we have automated cash runway and related cash burn metrics using a range of inputs, including your current bank balance, recent burn rate, working capital, budget, and forecast, allowing you to monitor the data in a single click each month.
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