Burn rate and runway are the two numbers that quietly govern every decision a startup makes. Burn rate is how much cash the company loses each month; runway is how many months of that burn the bank balance can cover. Together they answer the only question that ever really matters: how long until you must raise or turn profitable.
Net burn is monthly cash out minus monthly cash in. Runway is cash in the bank divided by net burn. If a company holds a certain balance and loses a fixed amount each month, dividing one by the other gives the months remaining. Gross burn, total spending regardless of revenue, is worth watching too, but net burn drives the runway math.
Raising money takes months, so a founder cannot wait until the runway is nearly gone to start. The rule of thumb is to raise while there is still enough runway to negotiate from strength rather than desperation, typically beginning well before the tank is low. A company that runs out of runway mid-raise loses all its leverage, and sometimes the company.
Runway is extended two ways: raise more or burn less. Both have costs; cutting burn can starve growth, and raising can over-dilute. The healthiest position is knowing your exact runway at all times and treating the fundraising clock as always running. This is general information, not investment advice.
Raise from strength, not from empty.