Yc default alive calculator

Default Alive / Default Dead Calculator

A startup is "default alive" if its current revenue trajectory will reach profitability before it runs out of cash — without additional funding. It is "default dead" if it will run out of money first. This is the single most important financial diagnostic Paul Graham developed at Y Combinator.

This is not a fundraising model. It's a reality check. The answer determines whether fundraising is optional or existential.

When to Load

Trigger	Example
"Am I default alive?"	Founder asking about runway
"How much runway do I have?"	Financial planning
"Should I raise money?"	Strategic decision
"What's my burn multiple?"	Investor-ready metrics
"How long until we break even?"	Trajectory check
"Default alive/dead analysis"	Explicit framework request

How to Use

Quick Answer (No Script)

For a quick check without running the calculator, use the simplified heuristic:

Burn Multiple = Net Burn / Net New ARR

Burn Multiple	Signal
< 1x	Default Alive — growing efficiently
1x–2x	Healthy — capital-efficient growth
2x–3x	Warning — burning faster than growing
3x+	Default Dead — cash crisis without funding

Full Analysis (Script)

Run the CLI calculator for a precise analysis:

python scripts/default-alive.py \
  --monthly-revenue 50000 \
  --monthly-burn 120000 \
  --cash-on-hand 800000 \
  --monthly-growth 8

Output shows: runway (months), burn multiple, months to breakeven extrapolated, default alive/dead verdict, and the key levers available.

Required inputs

Flag	Description	Example
--monthly-revenue	Current monthly recurring revenue (MRR)	50000
--monthly-burn	Total monthly operating expenses	120000
--cash-on-hand	Cash remaining in bank account	800000
--monthly-growth	Month-over-month revenue growth rate (%)	8

Optional inputs

Flag	Description	Example
--revenue-growth-deceleration	Annual growth deceleration rate (%/month, default: 0.5)	0.3
--json	Machine-readable JSON output
--verbose	Show detailed month-by-month projection

Output fields

Field	Meaning
runway_months	Months until cash runs out (at current burn)
burn_multiple	Net burn ÷ net new ARR
months_to_breakeven	Months until revenue ≥ expenses (extrapolated)
default_verdict	ALIVE, DEAD, or MARGINAL
revenue_at_breakeven	Projected revenue when/if breakeven reached
gap_to_breakeven	Monthly shortfall remaining
levers	What can change the outcome (increase price, cut costs, etc.)

Methodology

The Core Calculation

The model projects month-by-month:

month_n_revenue = previous_revenue × (1 + growth_rate/100)
month_n_burn = fixed_burn + (variable_burn_ratio × month_n_revenue)
month_n_cash = previous_cash + month_n_revenue - month_n_burn

Growth rate decays over time (default: 0.5% per month) to model market saturation — startups don't grow at a constant rate forever.

Default Alive Test

The startup is Default Alive if:

projected_revenue > projected_expenses

at some point before cumulative cash goes negative, and the crossover happens with at least 3 months of remaining runway (safety buffer).

It is Default Dead if cash runs out first.

It is Marginal if breakeven happens with less than 3 months of runway remaining — technically possible but dangerously tight.

Burn Multiple

A metric Graham began tracking at YC to measure capital efficiency:

Burn Multiple = Net Burn / Net New ARR

Where:

• Net Burn = cash spent per month (total expenses minus revenue)
• Net New ARR = new annual recurring revenue added that month

A burn multiple below 1x means the company is generating more than it spends in new ARR terms — the strongest default-alive signal.

Levers

When the verdict is DEAD or MARGINAL, evaluate these levers (in rough order of impact):

1. Revenue growth — 10% faster growth compounds dramatically over 18 months
2. Cost reduction — Every dollar cut extends runway by one dollar
3. Pricing — A 20% price increase with minimal churn impact is often the fastest lever
4. Gross margin — Reducing COGS improves unit economics without topline change
5. Funding — Default dead means fundraising is existential, not optional

Examples

YC Typical Profile (Default Alive)

python scripts/default-alive.py \
  --monthly-revenue 30000 \
  --monthly-burn 75000 \
  --cash-on-hand 500000 \
  --monthly-growth 10

• Runway: ~11 months
• Burn multiple: 1.5x
• Breakeven: ~14 months (3 months short on runway → MARGINAL)
• Verdict: MARGINAL — needs faster growth, cost cuts, or funding

Pre-Revenue Startup (Default Dead)

python scripts/default-alive.py \
  --monthly-revenue 0 \
  --monthly-burn 80000 \
  --cash-on-hand 400000 \
  --monthly-growth 0

• Runway: 5 months
• Burn multiple: undefined (no revenue)
• Verdict: DEAD — fundraising is existential

Capital-Efficient SaaS (Default Alive)

python scripts/default-alive.py \
  --monthly-revenue 150000 \
  --monthly-burn 180000 \
  --cash-on-hand 2000000 \
  --monthly-growth 7

• Runway: ~66 months (effectively infinite)
• Burn multiple: 0.2x
• Breakeven: ~3 months
• Verdict: ALIVE

References

• references/default-alive-framework.md — Paul Graham's original framework with essay excerpts
• references/yc-fundraising-context.md — How default state drives fundraising strategy
• yc-weekly-growth-compass companion skill — For growth rate analysis