How Long is Your Startup Runway?

Corl
Corl
Dec 11, 2018 · 4 min read
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Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue. If you’re interested in learning more about revenue sharing, welcome to connect with Corl directly through Twitter, LinkedIn or through our website.


Calculating the ideal runway length is crucial to ensure all planes are able to take off and land safely. If the runway is too short, it won’t be safe for planes to take off or land. If the runway is too long, you wasted resources without providing additional benefit. In the startup world, you will often hear entrepreneurs talk about a startup or funding runway. This refers to how many months your company can operate before it runs out of money.

How do you calculate a startup runway?

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Calculating Gross Burn Rate

(Original Cash Balance — Remaining Cash Balance)/12 months = Gross Burn Rate

$180,000 original cash balance — $60,000 remaining cash balance = $120,000

$120,000/12 months = $10,000 monthly burn

Calculating Net Burn Rate

$180,000 original cash balance — $60,000 remaining cash balance = $120,000

$120,000/12 months = $10,000 monthly burn

$30,000 cash influx/12 months = $2,500 added cash per month

Gross Burn Rate — Added Cash = Net Monthly Burn

$10,000 gross burn rate — $2,500 added cash = $7,500 net monthly burn

Calculating Runway

Cash Balance/Net Burn Rate = Months of Runway

$180,000/$7,500 = 24 months of runway

How long should your startup runway be?

Tip: If you raise too much capital through VC’s, you end up wasting resources (equity).

How can I extend my startup runway?

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Alternatives to venture capital are also a great way to extend your runway because it allows startups to reduce the time it takes to receive capital while decreasing wasted resources. Revenue Sharing allows founders the ability to receive fast, flexible capital without giving up equity, board seats, or personal guarantees. Revenue sharing also allows you to focus on growing your business, which can help you realize revenue faster.

Conclusion


Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue. If you’re interested in learning more about revenue sharing, welcome to connect with Corl directly through Twitter, LinkedIn or through our website.

Feature Photo by Matt Bowden on Unsplash

Corl

Corl is an artificially-intelligent platform that finances…

Corl

Written by

Corl

Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue. #revenuesharing

Corl

Corl

Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue.

Corl

Written by

Corl

Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue. #revenuesharing

Corl

Corl

Corl is an artificially-intelligent platform that finances businesses in the digital economy and shares in their future revenue.

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