Runway

What Runway means in practice

Runway converts your bank balance into the unit that actually matters: time. It sets the deadline for every strategic decision, because reaching profitability, raising a round, or proving a metric all have to happen inside it.

The conventional target is 18 months, and the reason is practical rather than arbitrary. Raising a round typically takes three to six months from first conversation to money in the bank, and you need to be negotiating from strength rather than desperation. Starting a raise with six months left means fundraising while your position weakens by the week.

Runway calculated from a simple average is often misleading, because burn rarely stays flat. Planned hires, annual software renewals and marketing pushes all create step changes. A month-by-month cash projection reveals the real date you run out, which is frequently earlier than the headline figure suggests.

How it is calculated

Worked example

A company with £600,000 in the bank and growing revenue.

• Current net burn: £40,000/month → headline runway of 15 months.
• But two planned hires add £15,000/month from month three.
• And revenue is growing roughly £4,000/month, reducing net burn over time.
• Modelled month by month, cash actually runs out at around month 12.

Takeaway: The simple division said 15 months; the month-by-month model said 12. That three-month gap is the difference between a comfortable raise and a rushed one.

Common mistakes

• Dividing by current burn while ignoring planned hires and annual renewals.
• Starting a fundraise with under six months left, which materially weakens terms.
• Assuming revenue growth will continue on trend and reduce burn on schedule.
• Forgetting that receivables and payment terms delay when cash actually arrives.

Related tool: Runway calculator.

Related terms

• Burn Rate — Burn rate is the speed at which a company spends its cash reserves, usually expressed per month. Net burn is spending minus revenue; gross burn is total spending regardless of income.
• Unit Economics — Unit economics are the direct revenues and costs associated with a single unit of your business — usually one customer — showing whether each one is profitable before overheads.
• Bootstrapping — Bootstrapping is building a company using revenue and personal funds rather than external investment, retaining full ownership and control at the cost of slower growth.
• Break-Even Point — The break-even point is the level of sales at which total revenue exactly covers total costs, producing neither profit nor loss — the threshold a business must clear to become self-sustaining.