Runway

TL;DR

The number of months the current cash balance will last at the current net burn rate before the company runs out of money.

Runway is the most consequential single number for an early-stage startup. It's cash on hand divided by net burn. Most operators target at least 18 months of runway after a round closes — long enough to hit milestones, raise the next round, and absorb 3–6 months of fundraising slip without becoming desperate.

Runway shrinks faster than burn predicts when sales miss or when a vendor demands prepayment. Conservative founders model runway under several scenarios (revenue at plan, at 50% of plan, and at 0%).

Formula

Runway (months) = Cash on Hand ÷ Net Monthly Burn

• Cash on Hand — Current bank balance plus committed financing
• Net Monthly Burn — Average monthly cash decrease over recent period

Worked example

Cash on hand $6.0M, average net monthly burn $350k. Runway = $6.0M ÷ $350k = 17.1 months. The team triggers a fundraise at the 12-month mark to leave 5 months of buffer for a slipped raise.

Common pitfalls

• Optimizing on plan-case runway and being surprised when revenue misses.
• Letting runway drift below 12 months before starting the next raise.
• Failing to update runway weekly as conditions change.

When this shows up in a pitch deck

Runway shows up on the Financials and Use of Funds slides; investors check it as a sanity input.

See Runway in context

Runway shows up most often in these scoring rubrics and investor profiles — jump straight to who cares about it and how to pitch them.

In VC frameworks

• Family Office — pitch deck framework

Related terms

• Net Burn — Monthly cash outflow minus cash inflow — the actual rate at which the cash balance is depleted.
• Burn Rate — The rate at which a company spends cash, typically reported monthly. Reported as either gross burn or net burn.
• Burn Multiple — Net new ARR divided by net burn — the dollars of capital consumed per dollar of new ARR generated.
• Bridge Round — A short-term funding round between priced rounds, often a SAFE or note from existing investors, used to extend runway to the next milestone.
• Venture Debt — Debt financing extended to venture-backed startups, often used to extend runway between equity rounds with minimal additional dilution.

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