The number of months a company can keep operating at its current net burn before it runs out of cash.
Runway (months) = current cash balance ÷ net monthly burn
You hold £4.8M in cash and burn £400,000 net per month.
£4,800,000 ÷ £400,000 = 12 months of runway
Runway is the time you have left. It divides your cash in the bank by your monthly net burn to give the number of months until the balance reaches zero, assuming nothing changes. With £4.8M in the bank and £400,000 of net monthly burn, you have twelve months of runway.
The figure is only as good as the burn assumption behind it. If burn is rising — through hiring or increased spend — flat-burn runway flatters reality, and you should model the trajectory rather than a single snapshot. Conversely, growing revenue lowers net burn over time and extends runway beyond the simple calculation.
Runway drives the most consequential decisions a startup makes: when to raise, how aggressively to hire, and when to cut. Because fundraising itself takes months, the practical rule is to start raising well before runway runs short — treating the last several months of cash as a buffer, not as spendable time.
Runway is the single number that dictates urgency. It tells you how long you have to reach profitability or the next raise, and because fundraising takes months, knowing your runway is what lets you raise from strength rather than desperation. Mismanaging it is the most common way otherwise healthy startups die.
Conventional wisdom is to keep at least 12 months of runway at all times, and to raise with 18–24 months in hand so you have room to hit milestones before needing more cash. Falling below 6 months is a danger zone.
Divide your current cash balance by your net monthly burn rate. £4.8M of cash at £400,000 net burn a month gives 12 months of runway — the time until cash hits zero if nothing changes.
A common target is at least 12 months at all times, with 18–24 months just after a raise. Because fundraising takes time, you should start the next round well before runway runs out.
Yes. Rising revenue lowers net burn, which stretches runway beyond the flat-burn calculation. The simple formula assumes constant burn, so model the trajectory if revenue or spending is changing.
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