Burn rate is the speed at which a startup or business spends its cash reserves. Gross burn is total monthly spending; net burn is spending minus revenue. Runway = Cash reserves ÷ Net burn rate.
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Pro Tip
Target 18+ months of runway after any fundraise. It takes 6–9 months to close a round, so 18 months gives you one chance to fundraise comfortably.
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Did You Know?
Paul Graham of Y Combinator recommends founders always know their runway to the day — it is the single most important metric for survival.
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