What is Runway? Definition, Formula & Benchmarks

What is runway?

Runway is how many months a startup can keep operating before it runs out of cash, assuming its current net burn rate. You calculate it by dividing the cash in the bank by net monthly burn. Runway is the clock every funded startup runs against between raises.

Formula

Runway (months) = Cash in Bank ÷ Net Monthly Burn

Cash in BankYour current liquid balance
Net Monthly BurnAverage monthly net cash loss

Worked example

A startup with $1,000,000 in the bank burning $80,000 a month has 12.5 months of runway. Raise burn to $125,000 and that runway shrinks to 8 months, the same cash, far less time to hit your next milestone.

Benchmarks by stage

Most seed to Series A startups aim to keep 12–18 months of runway after a raise, giving enough time to hit the milestones needed for the next round or reach profitability. Dropping below roughly 6 months is the point most investors treat as a red flag.

< 6 mo · Danger

6–12 mo · Tight

12–18 mo · Healthy

> 18 mo · Strong

Source: Common seed–Series A VC guidance (2025)

Why it matters for fast-growing companies

Runway sets your real deadline. It decides when you must start fundraising (most founders begin about six months before zero cash), how aggressively you can hire, and whether you negotiate your next round from strength or from desperation.

Frequently asked questions

How many months of runway should a startup have?+

A common target is 12–18 months after a raise. That is enough to show progress and begin the next raise from a position of strength, since fundraising itself often takes three to six months to close.

When should I start fundraising based on runway?+

Most founders start raising about six months before hitting zero cash. Fundraising takes longer than expected, and negotiating with under a quarter of your runway left materially weakens your position.

Runway