Round mechanics

Runway

The number of months the company can operate before cash runs out, at the current net burn rate.

Runway is cash on hand divided by net monthly burn: the time the company has left at its current spending. It is the central planning number of a pre-revenue company, and its honesty depends entirely on the burn figure used (net of reliably incoming cash, with one-offs normalized out) and on which future inflows the model dares to count.

The planning discipline runs on scenarios. A base case with committed cash only; a downside where the grant slips a quarter and the hire happens anyway; an extension case showing which costs could stop. The number that matters in each: where the cash-out date lands relative to the next milestone, because runway that ends 1 month after a key technical demonstration is not runway, it is a coin flip on an R&D schedule.

The raise timing rule follows directly: the next fundraise starts while runway still covers the full process, 12 months is the comfortable software threshold and 15 is safer on deep tech diligence timelines, less than 9 puts the company negotiating under visible pressure, and every investor can read a runway from a burn table as fast as the founder can. Extending runway is also not 1 lever but 3: cut burn, add non-dilutive money, or bridge; each has a cost, and the cheapest is usually the one decided earliest.

In Canada

For a Canadian tech company the runway model has a distinctly Canadian rhythm: SR&ED refunds arrive after the fiscal year is filed and reviewed, and NRC IRAP contributions reimburse expenses already incurred, so the non-dilutive layer extends runway on paper months before it extends it in the bank. The honest model therefore tracks cash received, cash committed and cash hoped-for separately, and never lets a claimed credit stand in for a wire. Raises also deserve margin: the domestic pool of leads is smaller than in the US, and many rounds close with cross-border investors on their own timelines. Some companies finance the SR&ED receivable to pull the refund forward, a runway lever with a cost, like the other 2: cutting burn and bridging.

Run the numbers

CA$1,800,000 in the bank with a net burn of $150,000 per month is 12 months of runway (1,800,000 / 150,000). A committed grant instalment of $300,000 arriving in month 4 extends it to 14 months, but only once received: a disciplined model counts it as committed, not as cash, until the wire lands.

Related terms

Updated July 9, 2026. Open this term in the app →