Runway
Understanding Runway
Runway refers to the amount of time a startup can continue to operate before it runs out of money. It is calculated based on the company’s current cash balance and monthly burn rate. Runway is a crucial metric for startups, as it indicates how long they have to achieve profitability, raise additional funding, or execute a pivot before running out of funds.
How to Extend Runway
- Reduce Expenses: Cutting costs to lower the burn rate.
- Increase Revenue: Boosting sales to bring in more cash flow.
- Secure Additional Funding: Raising capital from investors to extend the company’s financial lifeline.