What Is Default Alive? (And What's Default Dead?)
Default alive is the state where a startup's current revenue growth rate and current spending rate get it to profitability before the cash in the bank runs out — without raising another round. Coined by Paul Graham, it's the sharpest one-line health check a founder can run, because it reads runway, growth, and burn together instead of tracking each in isolation. The opposite state is default dead: at the current trajectory, the company runs out of money before growth catches up with burn, and survival depends entirely on a future fundraise.
The distinction matters because 'growing fast' and 'safe' are not the same claim. A startup can post a strong month-over-month growth number and still be default dead if its burn is growing just as fast, or faster. Default alive is a statement about trajectory, not about the size of the growth number on its own.
The Default Alive Formula
The test is simple to state, even though the inputs take honesty to get right: take your current monthly revenue growth rate and your current monthly burn rate, and project both forward. If revenue crosses expenses before cash hits zero, without changing your current spending trajectory, you're default alive. If cash hits zero first, you're default dead.
In practice, most founders approximate it with one question: at my current growth rate, how many months until revenue covers my burn, and is that sooner than my runway ends? If the answer is yes, you can, in theory, ride your current trajectory to profitability without a check from anyone else.
| Default Alive | Default Dead | |
|---|---|---|
| Trajectory | Revenue growth reaches breakeven before cash runs out | Cash runs out before revenue reaches breakeven |
| Next round | Optional — a choice, not a requirement | Required for survival |
| Negotiating position | Strong — investors need you more than you need them | Weak — you need the round to exist |
| What it depends on | Current growth rate and burn, unchanged | A future fundraise closing on time |
A Worked Example: Two Startups, Same Growth Rate
Take two startups with an identical 15% month-over-month growth rate. Startup A has $400K in the bank and burns $40K a month; at its current burn and growth trajectory, revenue overtakes expenses in month 7, well inside its 10-month runway. Startup A is default alive.
Startup B has the same 15% growth rate but burns $90K a month against $360K in the bank. Its runway is only 4 months, and revenue doesn't catch burn until month 9. Startup B is default dead, despite growing at the exact same rate as Startup A. The growth number was never the deciding variable; burn relative to cash was.
$40K
Startup A monthly burn — default alive
$90K
Startup B monthly burn — default dead
15%
Identical growth rate for both
Default Alive Doesn't Mean 'Don't Raise'
Default alive is a safety statement, not a strategy. It means you have the option to skip the next round, not that you should. Plenty of default-alive companies still raise, because capital lets them outspend competitors on growth, hire ahead of demand, or grab a market before a rival does. The difference is that they raise from strength: on their own terms, at their own timeline, without a gun to their head.
Default-dead companies raise from weakness. Every fundraising conversation is really a survival conversation, and investors can tell the difference — it shows up in valuation, in terms, and in how much diligence gets waived versus demanded.
Default Alive Looks Different by Sector
The formula is universal; the inputs are not. A Health-Tech startup selling into hospital procurement cycles can look default dead on a pure growth chart for quarters at a time, because its sales cycle is measured in pilot approvals, not signups — the real test is whether committed-but-unbilled pilot revenue, once it lands, closes the gap before cash runs out. A Green-Tech company burning on hardware or certification costs needs a longer runway buffer built into the same formula, since burn is front-loaded and revenue is back-loaded. An Edu-Tech company selling to schools on an annual procurement calendar can be default alive on paper and still miss its own math if it misses a single September buying window.
Reading default alive without adjusting for sector sales-cycle length is how founders mistake a temporary lull for a structural problem, or the reverse.
Test Default Alive in the Simulation
Founder Runway runs a 20-turn arc from Pre-Seed to Series A, and every turn recalculates your runway against your current burn and growth. Run a Health-Tech scenario and watch how a stalled hospital pilot pushes you from default alive to default dead in a handful of turns, even while your top-line metrics look stable. Run the same math in a Green-Tech or Edu-Tech scenario, and the sector's sales-cycle length changes how many turns of buffer 'default alive' actually buys you.
It's a faster way to build the instinct than waiting for a real cap table to teach you the same lesson.
Conclusion
Default alive is not a vibe, it's a trajectory: does your current growth rate reach profitability before your current burn empties the bank, with no future fundraise required to get there. Run the math monthly, not just at each board meeting, since burn and growth both drift faster than most founders expect. And when you are default alive, treat it as leverage in your next raise, not a reason to stop tracking it.
Frequently asked questions
What does 'default alive' mean for a startup?
Default alive means that at your current revenue growth rate and current burn rate, your company reaches profitability before your cash runs out, without needing to raise another round. It's a trajectory check, not a snapshot of how much money you have today.
What's the difference between default alive and default dead?
A default alive company's current growth and spending trajectory reaches breakeven before its cash runs out. A default dead company runs out of cash first — its survival depends on closing a future fundraise, which is not guaranteed.
Can a startup be default alive without being profitable yet?
Yes. Default alive describes a trajectory, not a current state. A startup can be unprofitable today and still be default alive if its current growth rate closes the gap to breakeven before its runway ends, with no change in spending.
Does being default alive mean a startup shouldn't raise more funding?
No. Default alive means raising is optional, not that it's the wrong move. Many default-alive companies still raise to grow faster or capture a market — the key difference is they do it from a position of strength, not survival.
Test this decision in the game.
Apply the same assumption across one run; which metric burned three turns later?