Question 1

What is cash runway?

Accepted Answer

Cash runway is the number of months your company can operate at its current cash position before running out of money. In its simplest form: runway = cash ÷ monthly net burn, where net burn is monthly cash out minus monthly cash in. Runway is how investors, boards, and operators translate a balance-sheet snapshot into time — time to hit milestones, time to raise, time to adapt. A 6-month runway and a 24-month runway are fundamentally different businesses even at the same ARR.

Question 2

What is default alive vs default dead?

Accepted Answer

Paul Graham's 2015 essay asks: at your current growth rate, will revenue exceed burn before cash runs out? If yes, you're default alive — you can become profitable on current cash without raising more. If no, you're default dead — you must raise or cut to survive. The distinction is more useful than 'months of runway' because it bakes in growth. A company with 9 months of runway but 15% monthly revenue growth can be default alive; a company with 18 months of runway and flat revenue is default dead. Source: paulgraham.com/aord.html.

Question 3

What is burn multiple, and what's a good number?

Accepted Answer

Burn multiple is net burn divided by net new monthly (or annualized) revenue — how many dollars you burn to generate one dollar of net new revenue. David Sacks popularized the metric in 2020; Bessemer's 2021 benchmarks classify it as: under 1× is amazing (capital-efficient growth), 1–2× is great, 2–3× is okay, 3× and above is concerning, and above 5× usually means you're buying growth that won't pay back. It's more honest than magic number or LTV/CAC in bad markets because it doesn't let you hide opex in 'strategic spend.'

Question 4

Should you always try to extend runway?

Accepted Answer

Not at any cost. Extending runway by cutting into the product, sales, or customer-success capacity that's generating your growth is how companies shrink their way into death. The right question is: is this dollar of burn generating more than a dollar of equity value per month? If yes, the burn is working — extend runway by raising, not cutting. If no, the burn isn't working — cut, then re-plan. Extending runway is a symptom, not a strategy; the strategy is making the burn productive.

Question 5

When should you start raising?

Accepted Answer

Begin serious fundraising conversations when you have 9–12 months of runway remaining. Below 6 months, you're in distress-signaling territory and valuation suffers materially; below 3 months, you're negotiating from a position of weakness that rational term-sheet math can't overcome. Fundraising takes 3–6 months for most rounds (longer in bad markets, longer for first-time founders, longer for non-consensus categories). Start before you need to — before the number on the runway counter starts dictating your strategy.

Question 6

Runway vs survival — what's the difference?

Accepted Answer

Runway assumes constant burn and no intervention. Survival assumes you actually respond — hiring freezes, salary cuts, vendor renegotiation, shifting to a profitable subset of the product. A company with 4 months of theoretical runway can survive 12 months if leadership executes decisively; a company with 12 months can be dead in 4 if nobody's willing to make the hard calls. When you're underwater, model survival paths, not runway. Runway is just the no-intervention baseline.

Question 7

How do investors think about runway?

Accepted Answer

Lead investors want 18–24 months of runway post-round so you can hit the milestones that justify the next round — the 'raise, deliver, raise' cycle with real distance between rounds. Investors evaluating your round will back-solve: how much are you raising, how long does it extend runway, and does that runway realistically cover the milestones you've promised? Running too lean signals either capital anxiety (bad) or over-optimism (worse). Running too fat signals dilution you'll regret. The middle — enough runway for two clean rounds plus buffer — is what everyone's looking for.

Question 8

How does the interest-rate environment affect runway?

Accepted Answer

In a high-rate environment (Fed funds above 4%, as we've had since 2022), capital is expensive, bridge rounds are harder, and valuation multiples compress. The same runway delivers less optionality: fewer fundraising-market windows, more downrounds, more founders forced to take bridges they didn't want. Plan for longer raises (5–7 months not 3), higher dilution per dollar, and more scrutiny on burn productivity. Keep extra runway buffer when rates are high — it's insurance against the fundraising market being closed at exactly the moment you need it open.

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