Runway
Time before funds deplete.
What does Runway mean?
Runway is the number of months a startup or business can continue operating before it runs out of cash, given its current spending and revenue. It is one of the most critical metrics for founders and investors because it determines how much time you have to reach profitability, hit a milestone, or raise the next round of funding. A longer runway gives you more room to experiment and grow, while a short runway signals urgency.
How to calculate Runway
Runway is calculated by dividing your current cash balance by your net monthly burn rate. Net burn is the difference between monthly expenses and monthly revenue: Net Burn = Monthly Expenses − Monthly Revenue. Then, Runway (months) = Cash Balance / Net Burn. For example, if you have $500,000 in cash, spend $80,000/month, and earn $20,000/month, your net burn is $60,000 and your runway is 500,000 / 60,000 = 8.3 months.
FAQ
Most advisors recommend maintaining at least 12–18 months of runway. This gives enough time to execute on strategy, adapt to market changes, and begin fundraising well before cash runs out. Early-stage startups often aim for 18–24 months after each funding round.
Gross burn is your total monthly expenses regardless of revenue. Net burn subtracts any revenue you earn from those expenses. If you spend $80,000/month and earn $20,000/month, your gross burn is $80,000 and your net burn is $60,000. Runway is typically calculated using net burn.
A common rule of thumb is to start fundraising when you have 6–9 months of runway remaining. Fundraising typically takes 3–6 months, so starting early ensures you do not negotiate from a position of desperation.
You can extend runway by reducing expenses (cutting non-essential costs, renegotiating contracts, slowing hiring), increasing revenue (raising prices, accelerating sales), or raising additional capital. Many startups combine all three approaches when runway gets short.
When runway hits zero the company can no longer meet its financial obligations — payroll, rent, and vendor payments. At that point the business must either secure emergency funding, find a buyer, or shut down. This is why tracking runway continuously is essential.
Related calculators
- Burn Rate— Monthly spending rate.
- Break-Even— Point where revenue equals cost.
- Profit Margin— Profit as percentage of revenue.
- MRR / ARR— Recurring revenue metrics.