Finance
Runway
The number of months a company can operate before running out of cash at current burn rate.
Runway is how long a company can operate before running out of money, calculated as cash on hand divided by net burn rate. Startups typically aim for 18+ months of runway after fundraising. Less than 12 months puts the company in fundraising mode regardless of strategy preferences.
Formula
Runway (months) = Cash on Hand / Net Burn Rate Example
Cash: $3M. Net burn: $250K/month. Runway = $3M / $250K = 12 months.
Related terms
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