Runway

Runway is the amount of time a startup has before it runs out of money, expressed in months. The basic formula is straightforward: cash in the bank divided by monthly net burn rate. If a company has $600K and burns $50K per month, it has 12 months of runway.

Most investors and advisors recommend maintaining at least 12-18 months of runway after a fundraise. This gives the company enough time to hit milestones, course-correct if needed, and begin raising the next round (which itself takes 3-6 months). Startups that let their runway drop below 6 months often find themselves negotiating from a position of weakness.

Runway is not just a financial metric; it is a strategic constraint that shapes every decision. With 18 months of runway, you can experiment and iterate. With 6 months, you need to cut costs or close a round immediately. The best founders manage runway proactively, adjusting spend based on milestones achieved and fundraising conditions, rather than waiting until the situation becomes urgent.