Runway
The number of months a startup can operate before running out of cash at the current burn rate.
What it means
Runway is the countdown clock of your startup. It tells you how many months of operation you have left given your current cash balance and spending rate. A startup with $300k in the bank and a $30k net monthly burn has 10 months of runway. Founders need to constantly monitor runway to make strategic decisions about hiring, spending, and fundraising timing.
Formula
Runway = Cash balance ÷ Net monthly burn rate
Why it matters
Running out of money is the most common way startups die. You should always know your runway and plan key milestones around it. Most advisors recommend maintaining at least 12-18 months of runway to avoid making desperate decisions.
What is startup runway?
Runway is how many months your startup can operate before running out of cash, calculated by dividing your cash reserves by your net monthly burn rate.
How much runway should a startup have?
Most advisors recommend 12-18 months minimum. If you're fundraising, start the process when you have at least 6 months of runway remaining.
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