What Is Runway?
The number of months a startup can operate before running out of cash.
The number of months a startup can operate before running out of cash.
Runway is the estimated number of months a company can continue operating at its current burn rate before exhausting its cash reserves. It's the most basic survival metric for startups.
Runway is calculated by dividing your current cash balance by your net burn rate. Investors typically want to see 18-24 months of runway after a funding round.
Extending runway can be achieved by reducing expenses (cutting burn), increasing revenue, or raising additional capital. Smart founders monitor runway weekly and plan fundraising well before reaching critical levels.
Formula
Runway (months) = Cash Balance ÷ Net Monthly Burn Rate
Example
With $2M in the bank and $100K/month net burn, you have 20 months of runway.
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