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Runway
Definition
The number of months a company can continue operating at its current burn rate before running out of cash. Runway is calculated as current cash balance divided by monthly burn rate and is the most critical survival metric for pre-profit businesses.
Related Terms
Real Options Analysis
Recurring Revenue
Regulatory Capital
Reinforcement Learning
Relational Capital
Related FAQ
What are realistic burn rates and how do you avoid misrepresenting runway?
Founders often calculate optimistic runway (assuming perfect cost control) when actual burn is higher. Honest runway = (cash on hand) / (conservative monthly burn + 3-month buffer).
Read full answer →Burn rate is monthly cash spending; runway is current cash divided by monthly burn rate, indicating how many months until capital runs out.
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