Runway is the number of months a startup can operate before running out of cash, calculated by dividing cash reserves by monthly burn rate. It determines urgency of achieving profitability or raising next funding round.
Runway tells you how long until you're broke. Formula: Cash in bank ÷ Monthly net burn rate = Months of runway. Example: ₹1 crore cash, ₹10 lakh monthly burn = 10 months runway. Critical thresholds: 18+ months = Comfortable (can focus on growth), 12-18 months = Healthy (time to build traction before next raise), 6-12 months = Need to start fundraising (process takes 4-6 months), Under 6 months = Crisis mode (cut burn or die). Fundraising takes longer than expected: first meeting to wire transfer typically 4-6 months for seed, 6-9 months for Series A, 9-12 months for Series B. Start fundraising at 12 months runway minimum. Extending runway: (1) Revenue growth—every ₹1 lakh monthly revenue = 1 extra month if burn stays flat, (2) Cut burn—pause hiring, reduce marketing, renegotiate contracts, (3) Bridge funding—small extension from existing investors (6-12 months), (4) Extend terms—switch to annual contracts (upfront cash), vendor payment terms. Runway anxiety is constant founder stress. Paul Graham advice: "Fundraise when you don't need to." Strong traction + 18 months runway = leverage in negotiations. Desperation shows and kills valuation.
Runway (months) = Cash Reserves ÷ Monthly Net Burn RateDespite $47B peak valuation, burned through billions. When IPO failed and runway dropped to 3 months, forced emergency $10B SoftBank bailout at 90% lower valuation.
₹50 lakh raised, ₹3 lakh monthly burn = 16 months runway. Start next fundraise at month 10-12 to have buffer for delays.
Infinite runway if revenue > expenses. But growth slower than funded competitors—tradeoff is control vs speed.
Runway determines stress level and options. Long runway (18+ months) lets you take smart risks, hire strategically, and negotiate from strength. Short runway (<6 months) forces desperate decisions—fire good people, accept bad investor terms, or shut down despite product potential. Most startups die not from bad ideas but running out of cash while figuring out PMF.
12-18 months minimum. Fundraising takes 6 months on average. Having 12+ months gives buffer for delays, rejections, and building stronger traction if needed.
Bridge round from existing investors (smaller amount, faster process). If that fails: drastic burn cuts (fire team, pause marketing), revenue focus (close deals aggressively), or graceful shutdown.
Not if market is winner-take-all. Sometimes optimal strategy is burn aggressively to capture market before funded competitors, then raise next round from position of dominance. Context matters.
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