How many months until your startup runs out of cash.
Months of runway
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Net monthly burn
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Total cash outflow
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Monthly revenue
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Cash on hand
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Your breakdown
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Amount
Understanding net burn and runway
Gross burn is total monthly cash out, every dollar spent on salaries, rent, software, contractors, and infrastructure. Net burn subtracts monthly revenue to give the true cash depletion per month. If a startup spends $40,000 a month and earns $5,000, the net burn is $35,000. Dividing $500,000 of cash by $35,000 gives roughly 14 months of runway. Once revenue exceeds expenses, net burn becomes negative, meaning the business is cash-flow positive and runway is technically infinite.
How to extend runway without raising capital
Cutting costs is the most direct lever. In a New Zealand context, common moves include negotiating longer payment terms with suppliers, switching from fixed office space to a co-working arrangement, pausing non-critical software subscriptions, and delaying hiring. On the revenue side, annual pre-payment deals with customers bring in cash earlier. Government grants through Callaghan Innovation, NZTE R&D incentives, or the Business Growth Grant can also extend runway materially if the startup qualifies.
When to start fundraising
The rule of thumb in the New Zealand ecosystem is to begin fundraising when you have at least 9 months of runway remaining. A typical seed or Series A process takes 3 to 6 months of pitching, due diligence, term sheets, and legal work. Starting too late means negotiating from weakness. Starting with 12 to 18 months of runway gives founders optionality: they can walk away from bad terms and take the time to find the right investor rather than accepting the first offer that keeps the lights on.
Frequently asked questions
What is startup runway?
Runway is the number of months a startup can operate before its cash balance reaches zero, assuming the current net burn rate continues. It is calculated by dividing total cash on hand by net monthly burn (total monthly expenses minus monthly revenue). Runway is the most watched metric for early-stage companies and investors.
What is a good runway for a New Zealand startup?
Most investors and advisors recommend maintaining at least 12 to 18 months of runway, particularly when preparing for a funding round. Raising capital typically takes 3 to 6 months in New Zealand, so starting the process with less than 9 months of runway puts founders under pressure. NZTE-backed accelerator programmes and angel networks such as Ice Angels typically want to see at least 12 months post-investment.
How does GST affect startup cash burn?
If the startup is GST-registered, GST on expenses is a temporary cash outflow that is reclaimed in the next GST return period. Net burn should ideally be modelled on GST-exclusive costs to avoid overstating the burn rate. However, many early-stage startups model gross cash flows because the timing of GST refunds is unpredictable and the extra working capital stress is real.
Should I include salary in monthly burn?
Yes. Founder salaries, staff wages, contractor fees, and employer KiwiSaver contributions at the minimum 3% are all real cash outflows and should be included in monthly burn. Sweat equity from unpaid founders is not a cash burn item, but if those founders are ever paid, it will extend the burn materially. Model the realistic scenario, not the optimistic one.