Runway: Why It Matters When Fundraising

Runway: Why It Matters When Fundraising

Could it make or break your next funding round?

If you’re preparing to raise capital, there’s one metric that investors will scrutinise more than most: your runway.

It’s more than just a reflection of how much cash you have in the bank. It’s a signal of how you operate — and whether you have the financial judgement and discipline to execute your plan.

1. What it reveals

Runway, in its simplest form, tells investors how many months your company can continue to operate before running out of cash. But investors don’t just run that calculation and move on. They examine your burn rate, your cost base, your assumptions about future revenue, and your ability to adapt if things don’t go as planned.

The truth is, a healthy runway tells a deeper story. It suggests you’ve thought carefully about your growth plan. That you’ve budgeted conservatively. That you’re not expecting your next round of capital to be a lifeline — but rather a catalyst.

2. How long should it be?

For most early-stage companies, investors expect to see a runway of around 18 to 24 months following a funding round.

If you're planning a growth-stage raise, your target runway would usually align with your next major value inflection point — the point at which you can justify a higher valuation or improved terms.

Less than that, and the questions begin. Will this company need to raise again in six months? Will they be forced to accept unfavourable terms next time? Are they too reliant on fundraising — and not focused enough on sustainability?

3. Why it matters

In our experience, timing is everything. Too many founders begin preparing for a funding round just weeks before their cash runs out. The process of preparing investor materials, refining the deck, setting up a data room, canvassing investors, and engaging with term sheets takes time. More time than most people expect.

A longer runway gives you breathing room. It means you can afford to be more selective with investors and terms. It allows you to prioritise building your business, not just pitching it. And it tells investors that you’re thinking strategically — not scrambling to stay afloat.

Of course, a short runway doesn’t necessarily mean you’re not investable. But it could mean you’ll need to do more to reassure investors that your plan is grounded in financial reality. That your forecasts are achievable. That your expenses are under control. And that you have a clear view of what success looks like at the next stage.

Fundraising in 2025

At our firm, we work with founders and investors at every stage of the fundraising journey — from term sheet to cash in the bank.

We help you prepare and negotiate term sheets, structure investment rounds, implement share option schemes, and resolve founder equity arrangements.

We also help you tell your story, in a way that builds confidence on both sides of the table.

If you’re thinking about raising capital this year — or advising a team who is — we’d be happy to speak with you about how to frame your position, protect your interests, and strengthen your outcome.