Runway

Runway is the estimated time before a company exhausts its available cash. A common calculation divides the current cash balance by average monthly net burn. If a company has $3 million in cash and burns $250,000 per month, the simple estimate is twelve months.

That calculation is a planning tool, not a guarantee. Revenue collections, hiring, annual expenses, debt payments, and changing growth investments can make future burn different from the historical average. Founders should maintain a monthly cash forecast with base, upside, and downside cases instead of relying only on one ratio. In a fundraising deck, runway connects the size of the round to the milestones it finances. Investors want to see enough time for execution plus a buffer to begin the next fundraise before cash becomes urgent. Extending runway by cutting every expense can damage progress, while spending quickly without measurable learning can leave the company with poor options. The useful question is what evidence the remaining cash can buy.