Runway is the number of months your business can keep operating before the cash runs out. You calculate it by dividing your cash balance by your monthly net burn. The figure assumes your burn stays flat, which is why it is a snapshot and not a forecast.
An example. With 300,000 euros in the bank and 25,000 euros of net burn, your runway is 12 months.
Runway is usually the first number an investor asks about, because it says how much time you have to reach the next milestone. Recalculate it every month, since both the cash balance and the burn rate move.
Worked example. You hold 180,000 euros. Your net burn over the last three months averaged 20,000 euros. Runway is 180,000 divided by 20,000, which is 9 months. Now you hire two people and burn rises to 30,000 euros. The same cash gives you 6 months. Hiring did not cost you money alone; it cost you three months of time.
Founders make three typical errors here. First, they use gross burn instead of net burn, which makes runway look longer than it is. Second, they count money that is promised but not received, such as a grant still under review or an investor who has only signed a term sheet. Cash in the bank is the only cash that extends runway. Third, they forget that raising money takes time. If a funding round needs four to six months from first meeting to money in the account, a nine-month runway means you start now, not in month six.
Many teams work with a simple rule: keep at least six months of runway at all times, and start raising when you still have nine to twelve. Below six months your realistic options narrow to cutting costs, raising prices, or collecting open invoices faster.
