Runway

What Is Runway?

Runway is the amount of time a company can keep operating before it runs out of cash, given its current rate of spending. It's a survival metric — arguably the most important number for any business that isn't yet profitable.

The formula: Runway = Cash Balance / Monthly Net Burn Rate

A Simple Example

Your startup has £600,000 in the bank. You're spending £80,000 per month and earning £20,000 per month. Your net burn rate is £60,000.

Runway = £600,000 / £60,000 = 10 months

In 10 months, without raising more money or reaching profitability, the cash runs out.

Why It Matters

Runway determines the urgency of every decision. With 18 months of runway, you can experiment and iterate. With 3 months, you're in survival mode. Most investors and advisors recommend maintaining at least 12–18 months of runway to give yourself enough time to execute your plan and raise follow-on funding if needed.

Extending Your Runway

There are only three ways to extend runway:

1. Bring in more cash — raise funding, take on debt, or secure grants
2. Increase revenue — sell more, faster
3. Reduce spending — cut costs, defer hires, renegotiate contracts

Most businesses use a combination of all three. The key is to make these decisions proactively — not when you're down to your last month of cash.

Runway and Fundraising

Fundraising takes time — typically 3–6 months for a round. If you wait until you have 3 months of runway to start raising, you've already waited too long. The general rule: start raising when you have 6–9 months of runway remaining.

Investors prefer to back companies that aren't desperate. Better runway means better negotiating position and better terms.