The working standard
Most institutional investors size rounds for eighteen to twenty-four months of runway. That reflects two realities: milestones that meaningfully de-risk a company rarely land in under twelve months, and a fundraise from first meeting to money in the bank commonly takes four to six.
Trigger points
| Runway remaining | What it means | What to do |
|---|---|---|
| 18+ months | Operating window | Spend on proving the next milestone |
| 9-12 months | Raise window opens | Start conversations now, not at nine |
| Under 6 months | Financing risk dominates | Cut burn or bridge; terms deteriorate fast |
Measure forward, not backward
Trailing three-month average burn understates reality whenever hiring is committed, a contract is signed, or annual prepayments have just landed. Build runway from forward net burn: planned spend including signed commitments, minus cash actually collected.
Collections matter more than invoices. A company invoicing on sixty-day terms has two months of revenue it cannot spend, and a runway calculation based on bookings will be wrong by exactly that amount.
Default alive is the real target
The stronger position is not more months of cash, it is a credible path to profitability on current cash at current growth. Model it explicitly: if the plan reaches breakeven before the money runs out, the next raise is optional, and optional raises price better.
Part of a guide
Startup financials: unit economics, runway and valuation
A guide to the financial questions that decide early-stage outcomes: CAC, LTV and payback, burn rate and runway, how much runway to hold, and how pre-revenue companies get valued.