◈ GLOSSARY · BUSINESS & ENTREPRENEURSHIP
Runway (Startup).
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
Runway is how many months a startup can keep operating before it runs out of cash, calculated as cash on hand divided by net monthly burn. It assumes burn stays constant — which it usually doesn't. Most boards want at least 18 months of runway after a raise; under 6 months and you're in fundraising emergency mode.
◈ IN PRACTICE
Example
A startup has $2.4M in the bank and burns $200,000/month. Runway = $2,400,000 / $200,000 = 12 months. If they want to raise at 18 months out, they need to start the round now.