What is Runway?
Runway is the length of time your startup can continue operating at its current burn rate before running out of cash. It’s typically measured in months.
Calculating Runway
Runway = Cash on Hand / Monthly Burn Rate
For example:
- $500,000 in the bank
- $50,000 monthly burn rate
- Runway = 10 months
Why Runway Matters
- Determines urgency of fundraising
- Influences hiring and spending decisions
- Affects strategic planning
- Impacts investor conversations
Managing Runway
- Monitor burn rate closely
- Start fundraising 6-9 months before running out
- Have contingency plans
- Consider revenue as runway extension