Runway is brutally simple: it's how many months you have before you run out of money. It's calculated by dividing your current cash balance by your monthly net burn rate.
If you have $600K in the bank and you're burning $50K per month, you have 12 months of runway. That's your deadline. You need to either become cash flow positive, raise more funding, or shut down before that clock hits zero.
Most experienced founders maintain at least 12-18 months of runway at all times. Why? Because raising capital typically takes 6-9 months from start to close, and you never want to fundraise from a position of desperation. Running out of runway kills more startups than bad products.
Smart founders track runway weekly and start fundraising when they have at least 9 months left. They know that 'just in time' fundraising is a recipe for accepting bad terms or running out of cash during a market downturn.
Runway (months) = Cash in Bank ÷ Monthly Net Burn Rate
Extended Runway = (Current Cash + Expected Revenue - Fixed Costs) ÷ Net Burn
Your startup situation:
- Cash in bank: $750,000
- Monthly revenue: $30,000
- Monthly expenses: $80,000
- Net burn: $50,000/month
Runway = $750,000 ÷ $50,000 = 15 months
You should start fundraising conversations now. By the time you close a round (6-9 months), you'll still have healthy runway and negotiating leverage.