What is cash runway?
Cash runway is how many months your company can operate before it runs out of money, at the current burn. A startup with 1.8 million dollars in the bank burning 150,000 a month has 12 months of runway.
It is the most important number on an early-stage dashboard, because it sets the clock on your next raise or your path to profitability.
The runway formula.
Runway in months = cash in the bank divided by net monthly burn. If you are cash-flow positive, with no net burn, runway is effectively unlimited.
Use net burn, not gross. If you are not sure of it, the burn rate calculator works it out.
A worked example.
You have 1.8 million dollars in the bank and burn 150,000 a month net. Runway is 1,800,000 divided by 150,000, which is 12 months.
What is a good runway?
Under 6 months is a danger zone, and you should be raising or cutting already. 6 to 12 months means start the raise now, because rounds take months to close. 12 to 18 is workable. Since 2022, investors increasingly expect 18 to 24 months of cushion, so a longer runway is now the safer target.
Runway and payback interact. A long CAC payback with a short runway is risky, because you are spending cash today that will not return for over a year.
How to extend your runway.
Two levers: hold more cash by cutting burn, or bring cash in sooner by growing revenue. Most teams over-index on cutting.
The durable move is more efficient growth. Organic search lowers your blended acquisition cost, so each new customer consumes less cash, which stretches runway. See the Workwize numbers, where organic became the lowest-cost pipeline channel.