The clock every startup is running against
Burn rate is how much cash a company spends, net of revenue, each month. Runway is how many months of cash remain at the current burn rate before the company runs out of money entirely. Every board conversation eventually returns to this number, because unlike a mature company, an early-stage startup has no fallback if runway hits zero before the next round closes.
Runway (months) = Cash in bank ÷ Monthly net burn
| Value | |
|---|---|
| Cash in bank | $2.4m |
| Monthly revenue | $180k |
| Monthly expenses | $480k |
| Monthly net burn | $300k |
| Runway | $2.4m ÷ $300k = 8 months |
The bridge round
A bridge round is a smaller, faster raise, often a SAFE or note (Lesson 14), meant to extend runway just long enough to hit a milestone that makes the next priced round easier to close, not meant to fund years of growth. Bridges are usually led by existing investors, since a new outside investor rarely wants to price a round explicitly framed as "we need more time."
| Signal | What it suggests about the bridge |
|---|---|
| Existing investors lead, on favorable terms | A healthy extension while a specific milestone finishes |
| Bridge priced flat or at a discount to the last round | Caution, may be pricing in real concern, not just timing |
| Multiple bridges in a row, no priced round in between | A serious warning sign; the company may not be fundable at any price |
A single, well-reasoned bridge is a normal part of many successful companies' fundraising history. A pattern of repeated bridges, however, is one of the clearest early indicators that a portfolio company is heading toward a down round (Lesson 29) or worse, and is exactly the kind of pattern Lesson 33's portfolio monitoring is built to catch early.
Checkpoint
- Runway = cash in bank ÷ monthly net burn; the clock every board decision runs against.
- Bridge round: a smaller, faster raise to extend runway to a specific milestone, not a substitute for a real priced round.
- Repeated bridges are a strong early warning sign, worth flagging well before cash actually runs out.
If anything here still feels unclear, ask before moving to Lesson 31.