What is Runway?
Runway is the estimated amount of time a company can continue operating before running out of cash, based on its current burn rate.
Table of Contents
Full Definition
Runway is calculated by dividing the current cash reserves by the monthly burn rate.
It provides a timeline for startups to reach profitability or secure additional funding.
Maintaining a healthy runway ensures stability and reduces pressure during growth phases.
Examples
Cash reserves
Burn rate
Financial planning
Benefits
Enables strategic decision-making
Assesses funding needs
Supports investor communications
Common Mistakes
Short runway increases urgency
Requires constant monitoring
Conclusion
Runway is a key financial metric to gauge startup health and sustainability.