Definition:

Runway is the amount of time you have remaining before an unprofitable business runs out of money.

Example:

If your company has $10,000 of cash in its bank account and that is reducing by $1,000 each month (i.e. cash out is $1,000 more than cash in), your runway will be $10,000 /$1,000 = 10 months.

Why it matters:

Runway is crucial to assess when to start fundraising (don’t leave it too late).