Runway math for a 12 person Berlin startup: '27 months' is a lie we tell ourselves

Every founder I know says "we have two years of runway". Honestly, most of them are counting wrong. We were. Here is our real math, slightly rounded, embarrassing parts included 😅

The naive version

• Bank: €2.1M (seed, closed last year)
• Monthly costs: about €115k
• Revenue: €38k MRR
• Net burn: €77k a month
• Runway: 2.1M / 77k = 27 months 🎉

Where the €115k actually goes

• Gross salaries, 12 people: €78k
• Employer social contributions on top: roughly 21% in Germany (pension, health, unemployment, long-term care, plus accident insurance). Another ~€16k. Founders from the US always forget this line.
• Office in Kreuzberg: €6.5k (yes, we know)
• Cloud: €5.5k
• SaaS tools: €4k. I counted 41 subscriptions. Forty one.
• Steuerberater, payroll provider, legal: €2.5k
• Insurance, misc, team lunches: €2.5k

Why 27 months is a lie

1. The hiring plan. We want 3 more engineers in Q4. That is about +€25k a month with contributions, net burn goes to ~€100k. Runway: 21 months.
2. Fundraising takes 6 to 9 months. Not the pitching. The whole thing: warming up investors, meetings, due diligence, lawyers, the notary (it is Germany, there is always a notary). You start while you still have at least 9 months of cash.
3. You want a buffer. Raising with 3 months of cash left is raising in panic, and investors can smell it.
4. Annual prepayments distort cash. Three customers paid annually in January. Our bank balance looked amazing in February. That is not new money for the rest of the year.

So the honest number: 21 months, minus 9 months of fundraising, minus a 3 month buffer. We have to start raising in about 9 months. Not 27. Nine.

What we changed

• The board slide shows "months until we must start fundraising", not "runway".
• We check default alive every month: if revenue keeps growing at the current rate and we hire nobody, do we reach break-even before the money runs out? Paul Graham's Default Alive or Default Dead? is still the best page on this. Today we are default dead by about 4 months. That number is what keeps me up at night.
• We cancelled 14 of the 41 SaaS tools. Nobody noticed. Nobody.
• We use the Probezeit properly. Six months of probation exists in Germany for a reason. We let two people go during probation last year. Painful, but keeping a bad hire for 18 months would have cost more than the office.

And yes, about half an engineer per year goes into cookie banners, data processing agreements and DSGVO paperwork. Greatest UX crime of the EU, I will die on this hill.

Feierabend. Tell me your real runway number, not the deck one.