Runway
The number of months a company can continue operating at its current burn rate before running out of cash, calculated by dividing remaining cash by monthly net burn rate.
Runway is the clock ticking on every startup. Cash divided by net burn rate equals months of survival. A company with $3M in the bank and $300K monthly net burn has 10 months of runway. This simple calculation drives some of the most consequential decisions in company building: when to fundraise, when to cut costs, and how aggressively to invest in growth.
The general rule is to begin fundraising when you have 6-9 months of runway remaining, since the fundraising process typically takes 3-6 months. Cutting it closer creates desperation that weakens your negotiating position. Having excess runway (24+ months) provides the luxury of patience and the ability to wait for better market conditions or negotiate better terms.
Growth teams extend runway in two ways: reducing burn (cutting inefficient spend, improving margins) and increasing revenue (growing faster so net burn decreases). The most impactful growth lever for runway is often improving unit economics rather than raw acquisition volume. Converting unprofitable customers into profitable ones, reducing churn to preserve MRR, and increasing expansion revenue from existing customers can extend runway significantly without requiring more capital.
Related Terms
Growth Loop
A self-reinforcing cycle where each cohort of users generates inputs (data, content, referrals) that attract the next cohort, creating compounding growth.
Churn
The rate at which customers stop using or paying for a product over a given period, typically measured as monthly or annual churn percentage.
Activation Rate
The percentage of new signups who complete a key action (the 'aha moment') that correlates with long-term retention and product value realization.
Product-Led Growth (PLG)
A go-to-market strategy where the product itself drives acquisition, activation, and expansion through self-serve experiences rather than sales-led motions.
Viral Coefficient (K-Factor)
The average number of new users each existing user brings to the product, where a K-factor above 1.0 indicates self-sustaining viral growth.
Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn — where 100%+ indicates growth without new customers.