review.firstround.com · 2025-09-30
· 246d
Understanding Cash Runway: A Founder's Guide to Financial Survival
Cash runway measures how long a startup can operate before depleting its cash reserves, calculated by dividing current cash balance by monthly burn rate. The article explains the formula, SaaS-specific considerations, industry benchmarks, and strategies for extending runway through cost optimization, profitability improvements, and fundraising.
Metrics in this report
Example Startup Cash Runway (Scenario 1)
6months
calculated
$600K cash balance with $100K monthly burn
Example Startup Cash Runway (Scenario 2)
10months
calculated
$600K cash balance with $60K monthly burn (after $40K revenue)
Recommended Cash Runway
12-18months
standard rule of thumb
general startup operations
Recommended Cash Runway (Tight Market)
24-36months
recommended
during tighter fundraising markets