What Is Startup Runway and How Do You Calculate It?
Runway is one of the most critical metrics for any startup. It tells you how long you can keep operating before you need more funding. Understanding and managing your runway can mean the difference between success and failure.
The Runway Formula
Runway (months) = Current cash ÷ (Monthly expenses − Monthly revenue)
This gives you your net runway: how long until you're out of money, accounting for any revenue you're generating. If your revenue exceeds expenses, congratulations, you're sustainable!
How Much Runway Should a Startup Have?
- Pre-seed/Seed: 12-18 months is typical. You need enough time to find product-market fit.
- Series A: 18-24 months. You should have clear metrics and need time to scale.
- Series B+: 24+ months. At this stage, you should be focused on growth, not survival.
Tips for Managing Your Startup Runway
- Always know your exact runway number. Update it monthly.
- Start fundraising when you have 9-12 months left, not 3.
- Have a Plan B: know which costs you can cut if needed.
- Revenue is the best way to extend runway. Focus on getting to profitability.