Runway
What it measures¶
Runway is how many months a company that is burning cash could keep going on the money it has, if it kept burning at the latest year's rate and raised nothing new. The check divides cash and short-term investments at the year-end by the monthly burn — the year's negative free cash flow (operating cash flow minus capital expenditure) divided by twelve. It asks: is the runway at least 18 months?
It applies only to a pre-profit company — one with a net loss in each of its latest two fiscal years.
Why it is on the page¶
A company with a short runway has to raise money soon, whatever the conditions — by borrowing or by issuing new shares, which dilutes existing owners. Eighteen months is the time investors in young companies usually allow for a round of fundraising, with a margin.
Thresholds, their source and the population they were fitted on¶
| Result | When |
|---|---|
| ✓ passed | cash and short-term investments ÷ monthly burn is 18 months or more |
| ✕ failed | it is below 18 months |
| ○ not evaluable | cash or free cash flow is not stored |
| ○ not applicable | the company did not burn cash in the year |
Twenty-four months is often quoted as the aim of a fundraise; the check draws its line at 18.
- Source: venture investors' convention.
- Fitted on: no published sample.
- Evidence grade: folklore.
- Basis: absolute.
A worked example¶
NuScale Power, fiscal year 2025 (statements stored on 25 October 2026): cash of 836.4 million and short-term investments of 417.8 million US dollars, against a burn of about 460.1 million over the year (38.3 million a month), give a runway of 32.7 months — passed.
What “No verdict” means here¶
The check is not evaluable when cash or free cash flow is not stored; it is not applicable when the company did not burn cash. Either way it leaves the area's count with the reason named.
What the verdict is and is not¶
A pass says the cash at the year-end would have covered at least 18 months of the latest year's burn. Burn rates change quickly in young companies, and the figure is already months old when the statements are published. It is not a forecast and not an instruction to trade the shares.