- Runway is cash divided by net burn, your costs minus your revenue, not gross. Earn anything and the honest number is longer than the scary one, and if revenue is growing, longer still.
- Turn runway into a date. The day your cash hits zero is a deadline you plan against, not a vague number of months you file away.
- A round takes three to six months to close, so start raising with about a year of runway, not a quarter. You need the money least at the point you have the leverage to raise it well.
- Aim to be default alive: on a credible path to survival without the next round. Under six months of runway is the danger zone, so cut fixed costs or line up a bridge now.
Ask a founder their runway and most can tell you to the month. Cash in the bank, divided by what they spent last month, equals the number of months they have left. It is a quick sum, it is the one everyone reaches for, and it is wrong in ways that matter. It ignores the money coming in, it hides the date that should be driving every decision, and it quietly encourages founders to start raising far too late. Runway is the most important number a startup has. It is worth getting right.
Gross burn lies. Net burn tells the truth.
The number most founders quote is cash divided by last month's total spend. That is gross burn, and it ignores the money coming in. Your real runway is cash divided by net burn, which is your costs minus your revenue. If you are earning anything at all, the honest number is longer than the scary one. And if that revenue is growing, longer again, because every month the gap between what you spend and what you earn gets smaller. A founder spending forty thousand a month with ten thousand of revenue growing steadily is not on the runway their spreadsheet shows. They have more room than they think, and the growth is quietly buying them more of it.
Stop counting months. Find your zero date.
Months are abstract. Nine months of runway is a fact you file away and forget. A date is a deadline you feel. Work out the actual day your cash runs out and put it in the calendar, because that one change turns runway from a number you glance at into a countdown you plan against. Everything keys off that date: when to raise, when to cut, when a hire is affordable and when it quietly isn't. If you take one thing from this, convert your runway into a date today, and look at it every time a decision costs money.
Start raising before you have to.
Here is the mistake that ends more good companies than bad products do: founders start raising when they are nearly out of money. By then they have no leverage, the terms are ugly, and the fear shows in the room. A round takes three to six months to close, sometimes longer, so if you begin with three months of runway you are already too late. Start when you have twelve months, not three. Count back six months from your zero date and put a second marker in the calendar. That is when the raise begins, while you can still walk away from a bad offer, which is the only thing that ever gets you a good one.
Default alive, or default dead?
Paul Graham's question is the sharpest one you can put to your own company. On your current revenue and growth, and without raising again, do you reach profitability before the money runs out? If yes, you are default alive, and you raise from strength or not at all. If no, you are default dead, and your survival depends on someone else's decision. Most early startups are default dead, and that is fine for a while, but you should know which one you are, and you should have a credible path to flipping it. The founders who sleep at night are the ones moving toward default alive, not the ones hoping the next round turns up in time.
What actually extends runway.
When runway gets tight, the instinct is a dramatic gesture. Resist the heroics and do the boring things that actually work. Cut fixed costs first, because they compound every month, unlike the one-off savings everyone reaches for. Grow revenue where you can, because it extends runway twice over, adding cash and shrinking net burn at the same time. And be honest that a raise is not a business. New money resets the clock, it does not fix the engine, and a startup that only survives by raising is default dead in a nicer suit. The most reliable way to extend your runway is to need less of it.
The honest number.
Read your runway honestly and it stops being a source of dread and becomes a tool. Net burn, not gross. A date, not a vague count of months. A raise that starts six months early, from strength rather than fear. And a quiet, constant push toward the day you no longer need anyone's permission to keep going. That is most of the game at the start: stay solvent long enough, and on your own terms long enough, to find the thing that works.