Runway
The number of months a company can operate before running out of cash, at its current spending rate.
Runway is how long a company's remaining cash will last given its current monthly net burn rate, assuming no new financing or major change in spending or revenue. It's the single most important number for a founder to know at all times, since it defines the deadline by which the company must either become cash-flow positive or raise more capital.
Runway should be recalculated regularly (monthly at minimum) since burn rate changes as headcount, revenue, and spending shift — a static runway number calculated once a quarter can badly mislead a founder about how much time they actually have left.
Runway (months) = current cash balance / average monthly net burnA company has $3M in the bank and is burning $250,000 per month net (expenses minus revenue). Runway = $3M / $250,000 = 12 months.
Start a new fundraise with at least 6 months of runway remaining, not less — fundraising typically takes 3-6 months end to end, and negotiating from a position of urgency with under 3 months of runway left badly weakens leverage on price and terms.
How much runway should a startup have before starting a fundraise?
Most experienced founders and investors recommend starting the process with at least 6 months of runway left, since raising typically takes 3-6 months and running out of leverage late in the process weakens negotiating position.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.