── ── Cash & runway
Default Alive or Default Dead: How to Run the Calculation in 5 Minutes
June 15, 2026 · 5 min read
Default alive means your startup reaches profitability before cash runs out — without raising another round. Here's the 5-minute calculation and what to do depending on your answer, with patterns from 26,724 startups.
Most founders can quote their runway in months. Far fewer can answer the question that actually matters: if nothing changes, do we make it? Paul Graham named this distinction in 2015, and it remains the single most clarifying question an early-stage founder can ask — because the answer changes what you should do this week.
What 'default alive' means
A company is default alive if its existing growth rate, applied to its existing revenue, reaches breakeven before its existing cash is exhausted — without raising another round. It is default dead if it runs out of money first.
The point of the framing is psychological as much as financial. "We have 14 months of runway" feels safe. "We are default dead and need to change something in the next 60 days" is the same situation, stated honestly. The second sentence is the one that drives action.
The 5-minute calculation
You need three numbers: (1) monthly net burn — total monthly spend minus monthly revenue; (2) monthly growth rate — this month's revenue divided by last month's, minus one; (3) cash in the bank — what's actually available today.
Then project forward: hold your cost base roughly flat, grow revenue at your real monthly rate, and check whether monthly revenue crosses monthly spend before cumulative net burn eats your cash. At a ~5–7% monthly growth rate, most companies that are default dead are dead by a wide margin — the gap is obvious. It's only near the line that a spreadsheet earns its keep.
Patterns from 26,724 startups
Across the 26,724 companies in the deciqAI dataset, the most consistent pattern is this: the most common cause of surprise default-dead status is scaling headcount before a repeatable acquisition channel exists. Burn rises on a step function; growth doesn't. The company that looked fine at 12 months of runway is default dead at 8 because it hired three people before it had a working channel.
The benchmark that matters
Sustained ~5–7% monthly revenue growth at seed stage typically puts breakeven within reach before an 18-month runway expires — assuming the cost base stays roughly flat. Below 3% monthly, most default-dead seed companies cannot grow their way out without a structural change.
What to do if you're default dead
There are only three levers, and you usually pull more than one: cut burn (fastest, most in your control, and the one founders avoid longest); accelerate growth (highest leverage, least certain); or raise (buy time with capital, but raising because you're default dead is the weakest negotiating position there is).
The mistake is treating 'raise' as the default response. If you're default dead and your plan is to raise more, you're often just moving the same problem one round forward at a worse price.
FAQ
What is 'default alive'?
A startup is default alive if its current growth rate, applied forward, reaches breakeven before its cash runs out — without needing to raise another round. Paul Graham introduced the term in 2015.
How do I calculate if I'm default alive?
Three inputs: monthly net burn, monthly revenue growth rate, and cash on hand. Project revenue forward at your real growth rate and check whether it crosses your cost base before cash runs out.
What growth rate makes a seed company default alive?
It depends on burn and cash, but sustained roughly 5–7% monthly revenue growth at seed stage typically puts breakeven within reach before an 18-month runway expires.
How often should I recalculate?
Monthly, and immediately after any decision that moves burn or growth — a hire, a price change, a big contract.