In startup finance, “runway” is the time a company can operate before its available cash runs out.
Founders usually estimate runway by comparing cash on hand with the company’s net burn rate, or the amount it loses each month after accounting for revenue. If a startup has $600,000 available and spends $100,000 more than it earns each month, its approximate runway is six months, assuming spending and revenue remain stable.
Runway matters because young companies often need to raise investment, increase revenue, or reduce expenses before reaching profitability. Board meetings and investor updates commonly discuss runway in months rather than only reporting a bank balance.
Runway is often confused with burn rate. Burn rate measures the speed at which cash is being spent; runway measures how long the remaining cash can last. Both figures can change quickly when hiring, sales, or fundraising conditions change.