What does "default alive" mean for a startup?
A startup is "default alive" if, on its current growth and spending, it will become profitable before it runs out of cash — without raising more money. "Default dead" means it runs out first. Paul Graham coined the terms. Knowing which you are is the single most important question for a founder.
Default alive vs default dead
The idea is simple: project your revenue and costs forward at the current trajectory. If you reach break-even (revenue covers costs) before your cash hits zero, you are default alive. If your cash hits zero first, you are default dead and depend on raising more money to survive.
It is a trajectory question, not a snapshot. A company with two years of cash can still be default dead if its burn is growing faster than its revenue.
How to calculate it
You need three things: your cash in the bank, your monthly net burn (costs minus gross profit), and your revenue growth rate. Project cash forward month by month; find the month it would hit zero (zero-cash month) and the month revenue covers costs (break-even month).
If break-even comes before zero-cash, you are default alive. If not, you are default dead — and you know exactly how many months you have to fix it or raise.
Why it matters
Knowing your status changes every decision. Default alive means you can raise from a position of strength, or not raise at all. Default dead means raising is not optional and the clock is running — and a round takes around six months to close.
Most founders watch their bank balance but never run this projection. Doing it turns a vague anxiety into a concrete number and a deadline.
How to become default alive
Three levers: cut burn, grow revenue faster, or raise more cash. The first two improve the business; the third buys time. The earlier you know your status, the cheaper these moves are.
FAQ
Who coined "default alive"?
Paul Graham of Y Combinator, in a 2015 essay arguing that founders should always know whether their company is default alive or default dead.
Can a funded startup be default dead?
Yes. Plenty of well-funded startups are default dead — they will run out before profitability unless they raise again. Funding does not make you default alive; trajectory does.
Check your own numbers.
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Last updated: June 25, 2026. For information only — not financial advice.