Runway is the number of months a startup can continue operating before running out of cash, calculated by dividing the current cash balance by the monthly net burn rate. It is the most critical financial metric for early-stage companies because it determines how much time remains to hit milestones, raise the next round, or reach profitability.
By Pitchkit · Last Updated October 10, 2026
Runway tells investors, and you, exactly how much time is left to prove the milestones that justify your next round. Every other plan, hiring, marketing spend, and product roadmap has to fit inside the runway you actually have.
Investors read runway alongside burn rate and milestones together. A company with 18 months of runway but no clear path to a fundable milestone within that window is in a weaker position than one with 12 months and a very clear plan.
Runway in months equals current cash balance divided by net burn per month. Net burn is total cash out minus total cash in from operations rather than accounting profit or loss.
Use actual cash flow rather than P&L profit, since accrual accounting can show a healthier or worse picture than what is actually happening in the bank account. Account for known upcoming changes such as a hiring ramp or a large annual expense.
Cash on hand is $1.2 million. Net burn is $80,000 per month. Runway equals $1.2 million divided by $80,000, or 15 months.
If you plan to hire five new people over the next two quarters, adding roughly $50,000 per month to burn once fully ramped, runway drops well below 15 months and should be modeled month by month rather than as a single static number.
Immediately after closing a round, most investors want to see 18 to 24 months of runway. This gives enough time to hit the next milestone, execute the plan, and start fundraising again while still holding 6 or more months of cash in reserve.
As runway falls below 9 to 12 months, most founders should already be actively fundraising, since a typical raise takes 3 to 6 months from first meeting to money in the bank.
Using accounting profit instead of actual cash movement, which can make runway look longer or shorter than reality.
Excluding annual prepayments, such as a yearly software contract paid in one lump sum, which distorts monthly burn if not smoothed out.
Ignoring a planned hiring ramp or known seasonality, which means the runway number is accurate today but wrong for next quarter.
On your use of funds slide, show runway in months both before and after the raise, alongside a brief hiring plan, for example: Runway 15 months post-raise, hiring 6 roles across go-to-market and engineering.
Turn your metrics into a pitch narrative investors can follow.
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