Cash on hand divided by monthly burn. Rough, on purpose, so you can run it in ten seconds.
Runway is the number of months a startup can keep operating before its cash runs out, calculated as cash on hand divided by average monthly burn. A company with $480,000 in the bank and $60,000 in monthly burn has 8 months of runway. Under 6 months reads as urgent; over 12 is generally healthy.
The rule of thumb investors use: start raising with roughly 6 months of runway still on the clock, not zero. A round that starts against a deadline negotiates from a weaker position than one that starts with room to spare.
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