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In startup terminology, runway refers to the amount of time a company can continue operating before it runs out of money. It’s like the fuel left in an airplane — once it runs out, the plane must land. Similarly, a startup with limited cash has only a certain number of months before it needs to raise more money or become profitable.
Runway helps founders plan, prioritize, and prepare for what’s ahead. For startups that aren’t generating steady revenue yet, knowing their runway is vital to survival and success.
Runway isn’t just a financial term — it’s a survival metric. Here's why every startup must keep track of it:
Financial Planning
Strategic Decision-Making
Risk Management
Investor Confidence
Goal Setting
In 2023, a Bengaluru-based SaaS startup missed its fundraising window due to overestimating its runway. Despite strong early traction, the company had to downsize drastically. One of the co-founders later said, “We thought we had 10 months. Turns out we had only 6.”
To better understand startup runway, it helps to know the key financial terms associated with it:
You can find a detailed breakdown of Burn Rate here.
Use this simple formula:
Runway = Available Cash ÷ Monthly Burn Rate
Here’s how to calculate it step-by-step:
Running out of money too soon is a common startup risk. Here are practical ways to extend your runway:
Regularly monitor your runway every month to stay proactive and agile.
Many startups get runway wrong. Avoid these pitfalls:
Underestimating Expenses
Ignoring Net Runway
Static Planning
Delaying Fundraising Too Long
Confusing Profitability with Cash Flow
So, how much runway should a startup aim for?
According to Sequoia Capital, startups should raise enough funds to last 18 months and reach the next significant milestone before needing another round.
Runway means how long a startup can keep running before it runs out of money. Think of it like how far a plane can go before it has to land and refuel.
A good runway typically spans 12 to 18 months. This gives enough time to execute plans, hit milestones, and raise the next funding round.
If you run out of runway, you may have to shut down, pivot quickly, lay off staff, or seek emergency funding. It’s a critical point that often leads to tough decisions.
Yes. You can:
It depends on the stage:
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