Runway
How many months a company can keep operating at its current burn rate before running out of cash. Cash ÷ monthly net burn.
Runway is cash in the bank ÷ monthly net burn rate. $600k in the bank, $50k/month net burn, 12 months runway.
For early-stage startups, runway is the single most important operational number. Below 12 months and you should be actively fundraising. Below 6 months and the fundraise conversation is urgent — investors smell desperation and term sheets get tougher. Below 3 months and you're either in extension talks with existing investors or planning a hard pivot.
Healthy practice is to plan with two runway figures:
- Optimistic: revenue continues to grow on plan, no surprises
- Conservative: revenue is flat from today, expenses unchanged
Run the company on the conservative number. If revenue actually grows, congratulations — runway extended. If it doesn't, you didn't get caught short.
Founders often confuse runway with months until profitability. They're different. A company can have 12 months of runway and 24 months until profitability — meaning it needs to raise before getting there. Better to make the gap visible and fundraise into it than discover the mismatch in month 11.
See also
Ask Cashowa about runway
Apply this concept to your actual numbers — with verifiable math.