Finance
Runway Calculator
= 5.000.000.000 ₫
= 600.000.000 ₫
= 150.000.000 ₫
= 80.000.000 ₫
Estimated runway
Cash balance by month (18 months)
How this tool helps and the terms you need to know
When to use this tool
- When preparing data for capital calling documents.
- When you need a quick estimate before discussions with investors.
- When you need to answer the question “how much capital does the business need and how long will it last?” in a fundraising package.
Basic calculation
Runway (months) = Cash balance ÷ Monthly net burn Net burn = Monthly operating cost − Monthly revenue
Start by subtracting the revenue received each month from the costs payable each month to arrive at the cash actually consumed (net burn). Then divide the cash on hand by that figure. If revenue already exceeds costs, the business is no longer burning capital and runway is theoretically unlimited.
Example: A business holds VND 3 billion in cash, spends VND 500 million per month and takes in VND 200 million in revenue. Net burn is VND 300 million and runway is 3,000 ÷ 300 = 10 months.
Terms used in this tool
- Cash balanceCash balance
- All the money the business can use immediately: bank account balances and deposits that can be withdrawn. Amounts still owed by customers and unsold assets are excluded.
- Monthly operating costMonthly operating cost
- The total payable each month to keep the business running: salaries, office rent, technology infrastructure, marketing, outsourcing and other recurring costs.
- Net burnNet burn rate
- The cash actually consumed each month after revenue is deducted. This is the figure that determines runway, as distinct from gross burn, which is total spend before revenue is deducted.
- RunwayCash runway
- The number of months the business can keep operating on its current cash, assuming income and spending stay unchanged.
- Conservative scenarioConservative scenario
- Recalculating runway on the assumption that revenue is lower or costs higher than planned, to see how far the business can hold out if market conditions are unfavourable.
How to read the results
Below 6 months
A warning level. The business needs to prioritise arranging funding or cutting costs immediately, as the time remaining is usually not enough to complete a funding round.
6 – 12 months
A sensible point at which to start preparing materials and talking to investors, while the business still negotiates from a position of strength.
Above 18 months
The business has room to focus on product and growth. If raising, it needs to explain clearly what milestone the new capital will take it to.
Founder's Toolkit