How long the company can operate before the money runs out: cash divided by net burn, usually expressed in months. It sets the deadline for a raise or a sale, and it is the first thing a buyer works out for themselves.
Why it matters
Runway turns a bank balance and a spending rate into a deadline, and a deadline changes behavior
in a way an abstract cash figure does not. A company with six months of runway is negotiating
from a different position than one with eighteen months, even if the two have identical products
and identical growth, because the shorter figure sets a real clock on when a raise or a sale has
to close.
A buyer or investor works this out for themselves as one of the first things they do, whether or
not it is volunteered, because it tells them how much leverage they have in a negotiation. Runway
running short is exactly the situation where a company most needs to project that it is not, and
exactly the situation a diligence process is built to surface anyway.
How it works
Runway is current cash divided by net burn, expressed in months. If a company has $1.2 million
in the bank and is burning $100,000 net per month, it has twelve months of runway at the current
rate — a figure that changes the moment either input changes.
It is only as good as the burn figure behind it. Because runway is a direct function of net
burn, everything that distorts burn — one-off costs, a single unusually strong or weak revenue
month — distorts the runway figure with it. A trailing average of several months of burn produces
a more stable runway estimate than dividing by the most recent month alone.
It assumes the current rate continues, which it rarely does exactly. Runway is a projection
under a constant-burn assumption, not a guarantee. A planned hire, a renewal that lands or does
not, or a deliberate change in spending will move the real date sooner or later than the
straight-line calculation suggests.
It sets the timeline for everything else. A fundraise, a sale process, or a plan to reach
profitability all need to complete inside the runway that remains, which is why it is usually the
first number worked out in any conversation about timing.
On GetDeal
Runway is not a figure GetDeal displays on its own, but the cash and burn figures it is built
from are both presented on a listing's Deep Dive tab and both read by the AI analysis report when
it builds its valuation range and per-section confidence, so a buyer reading the report can see
the same inputs a runway calculation would use.
Raise or sell your AI startupthe in-product glossary — the same definitions, alongside your deals
Questions people ask
- How is runway calculated from burn rate?
- Runway is the current cash balance divided by the net burn rate, giving a result in months. If net burn changes, whether because spending rises or revenue improves, the runway figure changes with it, so runway is best treated as a moving projection based on the current rate rather than a fixed number that stays true regardless of what happens next.
- Why does runway matter to a buyer or investor negotiating a deal?
- Because it reveals how much time pressure the other side is under. A company running short on runway has a real deadline to close a raise or a sale, which affects how much negotiating leverage it has. A buyer or investor typically works out an approximate runway figure early in a conversation, whether or not the company volunteers it directly.
- Does runway assume spending stays exactly the same?
- Yes, a straight runway calculation assumes the current net burn rate continues unchanged, which is rarely exactly true. A planned hire, a large renewal landing or falling through, or a deliberate cost change will move the actual date the cash runs out earlier or later than the simple calculation suggests, so it works best as a starting estimate rather than a fixed date.
See also
More in Metrics
- ARR — The annualised value of subscription revenue that repeats — contracted and expected to continue.
- Burn rate — How much cash the company consumes each month.
- CAC — What it costs, on average, to win one customer — sales and marketing spend divided by customers gained.
- Churn — The rate at which customers or their revenue leave.
- EBITDA — A measure of operating profit that strips out financing, tax and accounting charges for past spending, so two businesses can be compared on how well the operations themselves earn..
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Updated 2026-09-09