Runway

Formula: Runway (months) = Cash in Bank / Monthly Burn Rate Example: You have $120,000 in the bank and spend $10,000/month. Runway = $120k / $10k = 12 months. Why runway is critical: It's your countdown timer. When runway hits zero, you're out of business unless you raise funding or become profitable. Most founders underestimate how long things take and run out of runway before reaching milestones. Runway scenarios: (1) 18+ months: Comfortable. You can focus on building and hitting milestones without fundraising pressure. (2) 12-18 months: Healthy. Enough time to build, prove traction, and raise next round if needed. (3) 6-12 months: Yellow zone. Start planning next round or path to profitability. (4) Under 6 months: Red zone. Fundraising takes 3-6 months—you're already in danger. Extending runway: (1) Cut costs (downgrade tools, reduce team, remote work), (2) Increase revenue (price hikes, upsells, new customers), (3) Raise a bridge round (small funding to extend until next milestone), (4) Go profitable (stop burning, get to breakeven). Option 4 is underrated. The fundraising paradox: You need 6+ months runway to raise comfortably. Investors smell desperation. If you're at 3 months runway, you have no leverage—investors know you'll take any terms. Start fundraising when you have 12 months left, not 3. Runway vs. milestones: Track both. Having 18 months runway is useless if you need 24 months to reach product-market fit. Know your milestones (launch MVP, hit $10k MRR, reach 100 customers) and ensure runway covers time to reach them with buffer.

A startup raising a $2M seed round with $150k monthly burn has 13 months runway. Typical plan: spend 6 months building, 6 months validating traction, start fundraising at month 9 with 4 months runway remaining.