What is runway?
Runway is how many months a company can operate before its cash runs out at the current burn rate. It is cash on hand divided by monthly net burn. Runway assumes burn stays flat, so it moves whenever hiring, spending or collections change. Founders often size a funding round to cover 12 to 18 months.
Why it matters to a revenue leader
Runway sets the deadline for the sales plan. The company has to show enough progress to raise again, or reach profitability, before the cash runs out, and raising money takes months. A revenue leader should know the runway in months and the milestone the next raise depends on, because those two numbers define how much risk the sales plan can carry.
How to calculate it
Runway (months) = Cash balance / Monthly net burn.
Common mistake: holding burn flat while the hiring plan raises it, which overstates runway.
Example
Fictitious numbersA company has $6 million in cash and a net burn of $400,000 a month, for 15 months of runway. The plan adds 8 sellers, raising net burn to $520,000 a month. If those hires start now, runway falls to about 11.5 months.
"How many months of runway do we have, and what sales result must we show before we raise again?"
Sources
- Cash Runway Explained: Formula, Examples, and Uses in Finance checked 9 Oct 2026
- A Guide to Seed Fundraising checked 9 Oct 2026