runway

Why it matters#

Runway is the number that sets the deadline for everything else. It determines when you need to raise, whether you can afford the next hire, and how much time you have to reach profitability. Investors ask for it first because it tells them how long their money buys and when the next conversation happens.

Where the simple formula breaks#

Dividing cash by burn assumes this month repeats unchanged until the money is gone. Almost no business works that way. Costs step up when someone joins, revenue is seasonal, tax and insurance land as lumps, and customers pay late. Any of those can move the date by months in either direction.

The more useful version is a projected bank balance: model the months individually and read off the point where the line crosses zero. That also lets you ask the question you actually care about — not "how long have I got?" but "how long have I got if I make this decision?"

Gross vs net runway#

If you calculate runway against gross burn — total spend, ignoring the money coming in — you get a deliberately pessimistic figure that answers "what if revenue stopped tomorrow?" Both are legitimate; just be explicit about which one you are quoting, because the two can differ substantially for a business with real revenue.