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Software startup · 14 min

Burn rate and runway

Many software startups lose money on purpose for years, paid for by investors. The question founders worry about most is simple: how many months until the money's gone?

Ticket 01 · The guess

How long does it last?

Your tool has $1.5Mexample (example number: Simplified example: your tool: cash in the bank after a seed round.) in the bank after raising money. It spends $125,000example (example number: Simplified example: your tool: everything the company spends in a month.) a month and brings in $10,000example (example number: Simplified example: your tool: money coming in this month (the first lesson's example month).), and money coming in grows 10%example (example number: Simplified example: your tool: how much money coming in grows each month.) every month. How many months until the cash is gone?

24 months
0 months36
Words to know

Spot something wrong?

Tell us what looks off. No name or email needed.

What kind of problem?

0 / 1000

We'll also send this page, the lesson, ticket 1, so we can find it. Nothing else. Privacy

·
Sources and every number

Every number

  • $1.5Mexample (example number: Simplified example: your tool: cash in the bank after a seed round.) · Simplified example: your tool: cash in the bank after a seed round.
  • $125,000example (example number: Simplified example: your tool: everything the company spends in a month.) · Simplified example: your tool: everything the company spends in a month.
  • $10,000example (example number: Simplified example: your tool: money coming in this month (the first lesson's example month).) · Simplified example: your tool: money coming in this month (the first lesson's example month).
  • 10%example (example number: Simplified example: your tool: how much money coming in grows each month.) · Simplified example: your tool: how much money coming in grows each month.
  • 14 monthsexample (example number: Worked out from the examples, month by month: the cash runs out a little over fourteen months in.) · Worked out from the examples, month by month: the cash runs out a little over fourteen months in.
  • 13 monthsexample (example number: Worked out: the cash divided by this month's net burn, if money coming in never grew.) · Worked out: the cash divided by this month's net burn, if money coming in never grew.
  1. Lessons›
  2. Industries›
  3. Software startup
  • ·Before this: How a software company makes money
  • ·Next: Hiring the first engineers
  • ·Free guide: How software companies make money
Skip to the lesson
Back to the home page and map, from TryOwning · Software startup · Lesson 2
Part 1 of 3Part 1 of 3, 0 done

Software startup · 14 min

Burn rate and runway

Many software startups lose money on purpose for years, paid for by investors. The question founders worry about most is simple: how many months until the money's gone?

Ticket 01 · The guess

How long does it last?

Your tool has $1.5Mexample (example number: Simplified example: your tool: cash in the bank after a seed round.) in the bank after raising money. It spends $125,000example (example number: Simplified example: your tool: everything the company spends in a month.) a month and brings in $10,000example (example number: Simplified example: your tool: money coming in this month (the first lesson's example month).), and money coming in grows 10%example (example number: Simplified example: your tool: how much money coming in grows each month.) every month. How many months until the cash is gone?

24 months
0 months36
Words to know

Spot something wrong?

Tell us what looks off. No name or email needed.

What kind of problem?

0 / 1000

We'll also send this page, the lesson, ticket 1, so we can find it. Nothing else. Privacy

·
Sources and every number

Every number

  • $1.5Mexample (example number: Simplified example: your tool: cash in the bank after a seed round.) · Simplified example: your tool: cash in the bank after a seed round.
  • $125,000example (example number: Simplified example: your tool: everything the company spends in a month.) · Simplified example: your tool: everything the company spends in a month.
  • $10,000example (example number: Simplified example: your tool: money coming in this month (the first lesson's example month).) · Simplified example: your tool: money coming in this month (the first lesson's example month).
  • 10%example (example number: Simplified example: your tool: how much money coming in grows each month.) · Simplified example: your tool: how much money coming in grows each month.
  • 14 monthsexample (example number: Worked out from the examples, month by month: the cash runs out a little over fourteen months in.) · Worked out from the examples, month by month: the cash runs out a little over fourteen months in.
  • 13 monthsexample (example number: Worked out: the cash divided by this month's net burn, if money coming in never grew.) · Worked out: the cash divided by this month's net burn, if money coming in never grew.
  1. Lessons›
  2. Industries›
  3. Software startup
  • ·Before this: How a software company makes money
  • ·Next: Hiring the first engineers
  • ·Free guide: How software companies make money