Runway

Runway is the number of months a startup can continue operating at its current burn rate before exhausting its cash reserves. It is the most critical survival metric for pre-profitability companies. Runway dictates fundraising urgency, hiring pace, and strategic risk tolerance.

formula.sh

Runway (months) = Cash Balance ÷ Net Monthly Burn

> Cash Balance: total liquid cash in bank accounts available for operations
> Net Monthly Burn: average cash deficit per month (total expenses minus revenue collected)
> Result: the number of months before the account hits zero at current trajectory

example

example.sh

You have $720,000 in the bank and your net burn is $60,000 per month.

$720,000 ÷ $60,000

→ 12 months of runway

why it matters

Runway determines your leverage in every important decision — hiring, fundraising, and negotiating with investors. Founders with 18+ months of runway can be selective about term sheets and wait for the right lead investor. Founders with 4 months of runway take whatever they can get.

Investors benchmark against 18–24 months of post-raise runway as a standard expectation. If you raise a round that buys only 12 months, you will be back in fundraising mode within 6 months of closing — a brutal distraction from building. Model your next raise target to buy at least 18 months of runway at projected burn, not current burn.

common mistakes

✗Calculating runway using current burn without accounting for planned headcount growth that will increase burn month over month

✗Not starting the next fundraise until runway falls below 6 months — by then you are negotiating from desperation

✗Treating runway as a static number instead of a dynamic model that updates as burn and revenue change monthly

pro tips

✓Model three runway scenarios: base case, best case (faster revenue growth), and worst case (growth stalls) — board decisions should account for all three

✓Start your next fundraise when you have 9–12 months of runway remaining, not 3–4; fundraising takes 3–6 months even in good markets

✓A revenue acceleration can extend runway more cheaply than a capital raise — model both options before choosing

the mrrsucks take

You have 6 months of runway and a 3-month fundraising timeline. That means you have 3 months to find a lead, 0 months to negotiate terms, and negative 3 months to update your pitch deck. The math is not your friend here.

faq

How much runway should I raise in a seed round?+

Target 18–24 months post-raise. Enough to reach the next meaningful milestone — typically $1–3M ARR for a Series A — with a 3-month buffer for fundraising.

Can I extend runway without raising?+

Yes. Accelerate revenue (push for annual prepayments), cut non-essential spend, negotiate deferred compensation with team, or bring on revenue-based financing. A 20% burn reduction can add 3–4 months.

Does runway calculation change if I have committed ARR not yet collected?+

Technically yes — contracted but unpaid ARR can be factored in if you have high confidence it will close and be collected. Be conservative; fundraising projections should be based on cash received, not signatures.

Short runway roasts›Default alive explained›

related metrics

./install-the-daemon

$9. 365 roasts. one public endpoint of pure shame.