Runway is months of cash remaining before company runs out of money. Calculated: Cash in Bank ÷ Monthly Burn Rate. Critical survival metric—founders should always know runway. Target: 18+ months. Below 6 months = emergency mode.
Runway determines survival timeline. Calculation: ₹1.8 crore in bank, ₹30L monthly burn = 6 months runway. Runway scenarios: 18+ months: Comfortable—can focus on growth. 12-18 months: Start planning fundraise (fundraising takes 3-6 months). 6-12 months: Actively fundraising or cutting burn. 3-6 months: Emergency—cut burn 50% immediately or company dies. <3 months: Crisis—shut down or fire sale acquisition likely. Extending runway: Increase revenue (close more deals, raise prices, launch paid features), Reduce burn (freeze hiring, cut marketing spend, renegotiate contracts, go remote), Raise funding (equity, debt, grants), Hybrid approach (cut burn AND raise). Common mistake: Raising too late. Fundraising takes 3-6 months, so start at 12-15 months runway. Waiting until 6 months = desperate, weak negotiating position, bad terms, or no deal. Runway thinking: Series A funded: ₹40 crore raised, ₹1.5 crore/month burn = 27 months runway. Goal: Reach Series B metrics (₹10 crore ARR) in 18-24 months. Buffer for delays. Efficient: Raised ₹10 crore, kept burn ₹30L/month = 33 months runway. Reached profitability before needing Series B. Strong position. Runway is oxygen—track weekly in board meetings.
Runway (months) = Cash in Bank ÷ Monthly Burn Rate. With revenue: Runway = Cash ÷ (Burn - Monthly Revenue)Raised ₹20cr Seed, burned ₹50L/month = 40 months. Reached ₹2cr ARR in 24 months (still had 16 months left). Raised Series A from strength—great terms.
Raised ₹10cr, burned ₹2cr/month (hired 50 people too fast) = 5 months runway. Desperate Series A at 3 months runway—took bad terms (down round, huge dilution).
2 months runway, ₹30L in bank. Froze all spending, let go 80% of team, founders worked for free. Survived, became profitable bootstrapped company. Runway crisis forced discipline.
Runway is life or death. Running out = shut down (90% of startups) or fire sale acquisition (pennies on the dollar). Knowing runway enables planning: When to fundraise (12-15 months out), When to cut burn (below 9 months), When to panic (below 6 months). VCs check runway in diligence—<12 months at close = red flag (will need more money soon).
After raising: 18-24 months minimum (buffer for delays). Start next fundraise at 12-15 months runway (takes 3-6 months). Never drop below 6 months without plan.
At 12-15 months runway. Gives time for: 2-3 months prep (deck, metrics), 3-6 months pitching, Buffer if fundraise takes longer. Don't wait until desperate—bad deals result.
Options: (1) Cut burn 50%+ immediately (layoffs, freeze hiring), (2) Raise emergency bridge (debt, angels), (3) Get to profitability (revenue - costs > 0), (4) Shut down gracefully. Act at 6 months, not 2.
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