Cash Runway: How Long Your Startup Can Keep Flying

Cash Runway: How Long Your Startup Can Keep Flying

If growth is your altitude, cash runway is your fuel gauge.
It tells you how long your company can continue operating before funds run dry — a deceptively simple metric that often separates those who scale sustainably from those who stall.

In a world where capital efficiency has replaced blitzscaling, mastering your runway is one of the most powerful advantages a founder can have.

At a Glance

Definition:
Cash Runway = Cash Balance ÷ Monthly Net Burn

Ideal Range:

• Seed: 12–18 months
• Series A–B: 18–24 months
• Growth (C+): 24–36 months

Recommended Playbook: Financial Planning & Budgeting

1. Why runway matters

Cash runway tells you how much time you have to make progress before you need more capital.
It’s the metric that underpins every strategic decision — hiring, product investment, GTM expansion, or fundraising timing.

Runway gives founders three forms of power:

1. Negotiating power: Raising when you want, not when you have to.
2. Strategic clarity: Forcing prioritisation on the metrics that truly move the needle.
3. Psychological stability: Confidence in your time horizon improves decision quality.

When you understand your runway, you control your company’s destiny.

2. How to calculate it

[Runway](/glossary#runway) (months) = Cash Balance ÷ Monthly Net Burn

Example:
If you have $3M in cash and burn $250K per month:

[Runway](/glossary#runway) = 3,000,000 ÷ 250,000 = 12 months

If your burn fluctuates, use a 3-month average for more accurate forecasting.

3. How to measure burn rate

Net Burn = Total Cash Outflows – Total Cash Inflows (excluding financing)

• Include payroll, infrastructure, and operating expenses.
• Exclude one-time financing or equity inflows.
• Track gross vs. net burn to distinguish between outflows and overall deficit.

See also: Burn Multiple

4. Benchmarks by stage

Runway is not just about duration — it’s about trajectory. A 12-month runway with strong NRR and improving burn multiple is healthier than a 24-month runway with negative efficiency trends.

5. Why investors care

Runway is one of the first numbers VCs and CFOs review because it defines risk tolerance and funding cadence.
It helps them assess:

• Whether you can hit the next major milestone before running out of capital.
• If you’re managing capital responsibly relative to stage.
• How resilient you’ll be if fundraising conditions tighten.

In short: your runway communicates control.

6. Extending your runway strategically

1. Increase efficiency — reduce burn relative to growth (improve your Burn Multiple).
2. Delay hiring — don’t scale headcount ahead of validated demand.
3. Renegotiate vendor or cloud contracts — cash savings compound faster than expected.
4. Accelerate collections — reduce DSO (days sales outstanding).
5. Refocus investment — prioritise initiatives tied directly to revenue or retention.

Runway is not just about austerity — it’s about focus.

7. Using runway to time fundraising

A good rule of thumb:

• Start fundraising 6–9 months before your projected runway ends.
• Build in time for due diligence, negotiation, and capital close.

You’ll raise better terms when you still have at least 9–12 months of cash — not when you’re down to your last quarter.

8. Common pitfalls

• Ignoring net burn (tracking gross spend instead).
• Overestimating revenue inflows in forecasts.
• Treating runway as static — it should update monthly.
• Forgetting to model downside scenarios (lower growth, delayed funding).

Your runway forecast should always include base, stretch, and downside cases.

9. Linking runway to efficiency metrics

Together, they provide a full view of capital health and scaling readiness.

10. Founder takeaways

• Always know your exact cash balance and monthly burn.
• Forecast runway monthly — not quarterly — and share it with leadership.
• Use runway as a strategic constraint to improve focus.
• Runway is about time to achieve milestones, not just survival.

Founders who manage runway proactively make better strategic and fundraising decisions.

Explore: Financial Planning & Budgeting
Compare: Burn Multiple
Assess: Strategic Planning Diagnostic

Ready to assess your financial resilience? Take the free Founder Diagnostic.