Cash runway is the length of time a business can keep operating before it runs out of cash, assuming current spending and income continue. It is usually expressed in months and calculated by dividing available cash by the net monthly burn rate. Founders and investors use it to time fundraising and cost decisions.
What it means
If a company has £1.2 million in the bank and a net burn of £100,000 a month, its runway is roughly twelve months. Runway shortens if spending rises or revenue falls, so it should be recalculated regularly rather than treated as a fixed figure.
How it works in a UK business
Venture-backed scale-ups watch runway closely because raising a new round can take several months. Many boards set a minimum runway, such as nine or twelve months, below which they trigger fundraising, cost reductions or both.
A reliable runway figure depends on a realistic forecast. A weekly cash forecast gives the near-term view, while a monthly model covers the longer horizon and tests scenarios such as delayed sales or a slower raise.
When it matters
Runway is most important for loss-making, high-growth companies, but any business facing a downturn, a big investment or a refinancing benefits from knowing how long its cash will last.
Frequently asked questions
How is cash runway calculated?
Divide the cash available, including any undrawn committed facilities if you choose to count them, by the net monthly burn rate, which is cash out minus cash in. Use a forecast of future burn rather than last month's figure, because hiring plans and seasonality can change the answer considerably.
How much runway should a scale-up have?
There is no fixed rule, but many founders aim to start fundraising with at least six to nine months of runway left, because rounds often take longer than planned. Boards typically agree a minimum level and a set of actions to take if runway falls below it.
Last updated: 5 November 2026