Startup runway: how to work out how long your money lasts, and when to start raising

Runway is how long the company will live on the money already in the bank if nothing changes. Like a runway for a plane: before it ends, you need to either take off — become profitable — or find more money.

runway = cash in the bank ÷ net monthly burn

Net burn is expenses minus revenue. You have $300,000 in the bank, expenses of $75,000 a month and revenue of $15,000 — you burn $60,000 a month, the runway is five months.

If revenue exceeds expenses, the runway is infinite: money doesn't run out, it piles up.

Why the runway is shorter than it looks

The formula is honest, but in real life the runway is almost always shorter than it shows.

Expenses grow on their own. You hired a person — their salary starts now, and the payoff comes in a couple of months. Every hire bites off the runway immediately.
Advertising doesn't ramp up at once. Money goes into a new channel from week one, and customers arrive with a delay. If you count the runway from old revenue and new expenses, you'll see the worst number — and it will be the truth.
Raising takes time. Usually three to six months, and there will be more rejections than yeses. If you have four months in the bank and the search takes five, you're already late.

So it's useful to count not one number but two: the runway at current expenses and the runway at the expenses you've already committed to — hires in progress, channels you've launched.

When to start looking for money

A simple rule: start while the runway is still longer than the time to raise plus a margin. If raising takes six months, start with nine to twelve months in the bank.

There's a second reason not to wait. An investor looks at the story: is the customer count growing, are customers staying, how well does the product fit its market. And at how much you have left. A company that needs money in a month negotiates badly: it has to take what it's given and give up a bigger share.

Three ways to extend the runway

Cut expenses. The fastest and the most painful. Usually advertising gets cut — and with it, the future inflow of customers.
Raise revenue. Price, sales, retention. Slower, but it doesn't take away growth. Why retention often matters more than inflow — in Customer churn.
Raise money. A round adds months but costs equity. And you need to come to it with a story, not with panic.

The main thing is to decide while you still have a choice. With six weeks to zero, of the three ways usually only one is left.

Work out your own runway, with revenue growth — runway calculator.

How it works in Runway 200

The game is named after this number. In the game you start with $31,250 of your own and your friends' money, and the runway on the screen is counted exactly like this: cash divided by weekly burn — expenses minus revenue. When you become profitable, the runway becomes infinite.

Every ten weeks the game sums up the period. If the runway is under fourteen weeks, the summary says it plainly: “Everything else this period is secondary: either a round or costs.”

Going to investors isn't a “get money” button. It takes time, and the answer depends on the strength of your story: growth over recent weeks, how well the product fits its segment, the number of paying customers, market mood, reputation and churn. A weak story means rejections. A strong one means a term sheet with an amount and a share, which you can sign, decline or try to haggle over. Haggling sometimes brings better terms, and sometimes the fund just walks away.

More about the numbers an investor judges a company by — in Unit economics in plain words.

Try it yourself: the first ten weeks are free, no sign-up. See at what runway length you decide to hire — and at what length you start cutting.