← Glossary Business

Runway

How many months of cash you have left before you run out. Your oxygen.

Explained simply.

Runway = cash-on-hand ÷ monthly burn. It's the simplest calculation in startup finance and the one you should know cold at all times. Healthy runway is 18+ months; you have time to experiment and build. Tight runway is under 6 months; every decision is about survival.

An example.

With $3M in the bank and $300k/month burn, runway is 10 months. If you can reduce burn to $200k/month, runway becomes 15 months. Conversely, if a bad decision adds $100k/month in costs, runway drops to 7.5 months, same cash, much less time.

Why it matters.

Runway is the clock every startup lives by. You want to either reach profitability or raise your next round with at least 6 months still on the clock. Everything that isn't on the critical path of doing that is a distraction.