Runway

Runway is simply cash on hand divided by monthly net burn rate. It tells you exactly how many months you have before the money runs out. If you have $600,000 in the bank and burn $75,000 net per month, your runway is 8 months. This number dictates strategic decisions: when to fundraise, whether to hire, how aggressively to invest in growth, and when to cut costs.

Different stages require different runway targets. Pre-product startups should have 12-18 months of runway to build and iterate. Post-product companies should have 12-24 months to find product-market fit and prove unit economics. Growth-stage companies targeting fundraising should begin the process with at least 6-9 months of runway remaining, since fundraising typically takes 3-6 months.

Runway is not static; it changes as both the numerator (cash) and denominator (burn rate) change. Growing revenue extends runway even with constant expenses. A major new customer contract might add months. Conversely, a large unexpected expense or a key customer churning can dramatically shorten it. Founders should model multiple scenarios (optimistic, expected, pessimistic) to understand the range of possible outcomes.