Runway

Business Finance

Runway is the number of months a startup can operate before running out of cash, calculated as Cash on Hand / Monthly Burn Rate. A startup with $4M cash and $200K monthly burn has 20 months runway. Critical metric for fundraising timing — start raising 9-12 months before runway expires to allow for fundraising friction. Extending runway requires either reducing burn (layoffs, cuts), increasing revenue, or raising additional capital. The 2022-2023 funding environment forced many startups to dramatically extend runway through cost cuts. Boards typically require minimum 12-18 months runway; below 6 months triggers emergency action. Track monthly with rolling forecast.