Metrics & Performance
Runway Calculation
The formula for determining how many months a startup can operate before running out of cash: cash balance divided by monthly burn rate.
Runway = cash on hand / monthly net burn rate. A company with $3M in cash burning $200K/month has 15 months of runway. This calculation should account for revenue growth (which reduces net burn) and planned expense increases.
In Practice
With $5M in the bank and $250K/month net burn (after $100K/month revenue), the startup had 20 months of runway. But planned hiring would increase burn to $400K/month, reducing effective runway to ~14 months.
Why It Matters
Runway determines urgency. Companies should start fundraising with 6-9 months of runway remaining to avoid desperation. Running out of runway is the most common cause of startup death.
VC Beast Take
Runway is the startup's oxygen meter. The founders who watch it obsessively survive. The ones who don't check it until month 3 of runway usually don't.
Related Concepts
Further Reading
The Founder's Guide to Dilution: How Much You'll Actually Own
Walk through a realistic Seed to Series B scenario with real numbers. See exactly how option pools, round sizes, and preferences affect what founders actually take home at exit.
How to Calculate Your Startup's Burn Rate (And Why It Matters)
Burn rate determines when your startup dies. Learn the difference between gross and net burn, how to calculate real runway, and the framework for knowing if you're default alive or dead.
How to Build a Financial Model for Your Startup
A step-by-step guide to building a startup financial model that impresses investors, drives decision-making, and helps you forecast growth, burn rate, and runway.
Newsletter
The VC Beast Brief
Join thousands of founders and investors. Every Tuesday.
VentureKit
Ready to launch your fund?