How to calculate startup runway honestly, when to raise, when to cut, and how to talk about runway with investors without spooking.
Runway is the single most important number in a startup. Get it wrong and you either raise from a position of panic or leave money on the table. Here's how to calculate it, extend it, and talk about it.
Cash in bank ÷ trailing 3-month average net burn. Not gross burn, not last month's burn, not projected burn. The 3-month trailing net number is what investors calculate when they look at you, so it's what you should track.
18+ months: fundable from strength. 12–18 months: start the next raise. 6–12 months: raising becomes urgent and investors know it. Under 6 months: bridge territory, terms get worse fast. Plan the fundraise timing off these thresholds, not off calendar arbitrariness.
Payment terms with vendors (net-60 instead of net-30 buys months). Annual contracts collected up front. Deferred compensation from founders. Revenue-based financing on real ARR. Each of these buys months without cutting team.
If a cut extends runway from 8 months to 15 months, you go from crisis raise to fundable position. That trade is almost always worth it. Cutting reactively at 4 months of runway is too late — the damage to team morale exceeds the runway gain.
Never hide it and never lead with it. In first meetings, wait to be asked. Answer specifically: 'We have 14 months of runway at current burn, plan to raise in month 4 of the year.' Vague answers ('plenty of runway') signal problems.
Have it 6 months before you need the money, not 6 weeks. Investors given time to think about a bridge give clean terms; investors handed a fait accompli give punishing ones.
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