Runway is cash divided by net burn: the number of months before you must raise, cut costs, or reach profitability. Compute it from cash flow, not from the income statement.
Use net burn, not gross
Gross burn is total spending; net burn subtracts revenue. Investors price the round on net burn, because it is the true monthly deficit. A company with $600,000 in the bank burning a net $35,000 a month has 17 months of runway — a comfortable seed position.
The 18-to-24-month rule
After a fundraise, the convention is to hold enough runway to reach the milestones that price the NEXT round — usually 18 to 24 months. Anything shorter forces you back into the market before traction shows; anything much longer means you raised too early and sold equity too cheap.
Frequently asked questions
Should founder salaries be in the burn?
Yes — investors will add them back anyway if you underpay yourselves, so model the real cost. Underpaid founders show up as a risk, not a virtue.
Connectica provides information only, not financial, investment, legal or tax advice. Figures on this page are estimates and generalizations — confirm anything that matters with the relevant professional or authority.