Glossary · Metrics · Updated 28 August 2026
Runway is the number of months a startup can operate before running out of cash at its current spending rate. It is cash available divided by monthly net burn — spending after receipts are deducted.
It is the metric that shapes every decision at a company that is not yet profitable: when to hire, when to raise, when to cut. Investors always ask, because a single question tells them what negotiating position you are in.
Gross burn and net burn are different. Gross burn is total monthly spend. Net burn subtracts receipts. A company spending €80K and collecting €30K has a €50K net burn, and that is the figure that sets real runway.
The rule of thumb follows directly from how long raising takes. A European seed process runs four to six months from first meeting to money in the bank. Starting with under six months of runway means negotiating against a clock, which investors detect immediately and price into their offer.
Example: computing runway and timing a raise
A post-seed startup has €600K in the bank. Here is its monthly cash picture.
| Cash available | €600,000 |
|---|---|
| Monthly spend (gross burn) | €80,000 |
| Monthly receipts | €30,000 |
| Monthly net burn | €80,000 − €30,000 = €50,000 |
| Runway | €600,000 / €50,000 = 12 months |
| Length of a seed raise | 4 to 6 months |
| Ideal runway at kick-off | 9 to 12 months |
| Danger zone | Under 6 months |
With 12 months of runway this startup should start raising now: it will still hold six to eight months of cash at signature, which is what allows it to turn down a poor offer.
The common mistake
Computing runway on last month's burn rather than forecast burn. A signed hire, a rent increase or the end of a tax credit all move the denominator, and real runway often turns out two to three months shorter than the headline.
Frequently asked questions
How much runway do you need before raising?+
Nine to twelve months when the process starts. A European seed takes four to six months, and you want margin after closing. Below six months the time pressure becomes visible to investors and shows up in the terms.
What is the difference between burn rate and runway?+
Burn rate is a speed: how much you consume per month. Runway is a duration: how many months that speed buys you. Cash divided by net burn gives runway.
Related terms
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