Why your cash runway is a probability, not a date
The standard runway formula is cash ÷ net burn. If you have $400,000 in the bank and burn $40,000 a month, it prints "10 months" and everyone writes that number on a board slide. It is almost always wrong, because it silently assumes three things that are never true: that next month's burn equals this month's, that revenue grows at exactly your forecast, and that nothing bad ever happens.
Relax those three assumptions and a single date turns into a spread. That spread is the useful object. A company with "10 months of runway" might have a 15% chance of running out inside 6 months and a 40% chance of still being alive at 18 — and those two numbers drive completely different decisions than "10" does.
The three inputs founders get wrong
1. Growth uncertainty set too low. This is the big one. Founders enter ±2 points of monthly growth uncertainty when their actual month-to-month growth has swung between −5% and +25%. Look at your last 12 months, take the standard deviation of the monthly growth rates, and use that. It is usually 3–5× larger than the number people guess.
2. Burn treated as fixed. Payroll is sticky, but hosting, contractors, ad spend and one-off tooling are not. Even disciplined teams see 10–15% month-to-month variance in total costs. Entering 0% burn volatility makes the model far more optimistic than reality.
3. No shock term. A key customer churns, a payment processor holds funds, a launch slips a quarter. These are not tail events over an 18-month horizon — they are close to routine. A 5–10% monthly chance of a material revenue hit is a reasonable starting assumption for most early-stage companies.
How to read the fan chart
The shaded bands are percentiles across all 5,000 simulated futures. The middle line is the median: half of futures are above it, half below. The outer band is the 10th to 90th percentile — a reasonable "realistic best and worst case" range. The number that matters most is not any single line but P(out of cash) at 6, 12 and 18 months.
A useful rule of thumb: if your probability of running out of cash inside 12 months is above roughly 25%, you are not really running a 12-month plan — you are running a fundraise or a cost-cut and just haven't scheduled it yet. Start it now, while you still have leverage. Raising with 9 months of cash is a fundamentally different negotiation than raising with 3.
Frequently asked
What is a Monte Carlo runway simulation? Instead of computing one future from your average assumptions, it draws thousands of random-but-plausible futures — each with its own sequence of revenue and cost surprises — and reports the distribution of outcomes. It answers "what are the odds?" rather than "what is the number?".
How much runway should a startup have? Conventional guidance is 18–24 months after a raise, and never letting the balance fall below about 6 months without an active plan. Framed probabilistically: keep the chance of running out within 12 months comfortably under 20%.
Does this work for freelancers and agencies? Yes, and arguably better. Lumpy client revenue is exactly the case where an averages-based runway number misleads most. Enter your typical monthly income as revenue with a high growth-uncertainty figure to capture the lumpiness.
Is my financial data sent anywhere? No. Every simulation runs in your browser in JavaScript. There is no server, no account and no analytics on your numbers. Sharing only happens if you deliberately copy the share link, which encodes your inputs in the URL.
How many simulations does it run? 5,000 runs over a 60-month horizon, re-computed live every time you change an input.