Runway

Definitions

Runway is the amount of time a startup can continue operating before it runs out of money, assuming its current burn rate (monthly spending minus revenue) remains constant. Calculated by dividing remaining cash by monthly burn rate, runway is one of the most critical metrics for startup founders and investors. A startup with $500,000 in the bank and a $50,000 monthly burn rate has 10 months of runway. Founders typically begin fundraising when they have six to nine months of runway remaining, as raising capital takes three to six months on average. Extending runway involves reducing expenses (cutting staff, renegotiating contracts), increasing revenue, or raising additional capital. Running out of runway is the most common way startups fail. Investors evaluate runway when considering investments, and board members monitor it to anticipate future financing needs. The term creates a vivid metaphor: the startup is an airplane that must either achieve flight (profitability) or find more fuel (funding) before the runway ends.
In plain English: How many months a startup can keep going before it runs out of money — like the length of an airport runway before the plane has to take off.

1990s: VCs borrow the aviation metaphor — months of cash before a startup must either take off (become profitable) or crash
2008: Y Combinator's Paul Graham emphasizes runway as the single most important startup metric: 'You're alive if you have runway'
2022: The funding winter forces startups to extend runway through layoffs and cost cuts after years of growth-at-all-costs