What is default alive?

WHAT Question

Quick Answer

A default-alive startup will reach profitability with current cash on hand and current growth rate, before running out of money. Coined by Paul Graham. The opposite is default dead.

Detailed Explanation

Default alive vs default dead is the most important question Paul Graham asks YC founders. Compute: take current cash, current monthly net burn, current MRR growth rate. If MRR growth × gross margin reaches monthly burn before cash runs out, you are default alive. In 2026, VCs heavily favor default-alive companies.

Real-World Examples

Calendly: default alive from year 2

Many 2021 unicorns: default dead by 2024 due to ZIRP-era burn

Key Takeaways

  • Compute monthly — status changes fast
  • Default alive = leverage in fundraising
  • Default dead requires action this quarter
  • Stress-test for 30% revenue dip

Frequently Asked Questions

Default alive check?

Cash, monthly net burn, MRR growth rate. If growth × gross margin reaches burn before cash zero, you are default alive.

Should default-alive startups raise?

Only on great terms. Default alive means you can walk from any term sheet.

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