STARTUPS AND RUNWAYS

A runway is a rectangular strip of land in an airport for taking off or landing aircraft smoothly. A decade back the word runway reminded me of aircraft and the strip in the airport

Having had the opportunity to enable a startup in the USA and India with good founders & working with startups the past couple of years, ( managed exits too) I have understood the difference between the airport runway and the startup runway, and a few times the hard way.

On an Airport runway, the aircraft definitely takes off and very rarely it doesn’t ( technical reasons is what we get to hear mostly), or else the aviation industry will cease to exist. Also, it flies and lands safely at the destination for refueling like startup founders raise funds with every round.

For new startup founders, your company is an aircraft.

• the runway for your company is the total number of months you have before you run out of cash.
• You can calculate this by dividing the total cash and the estimated average monthly burn rate. Overestimate the costs.

*For software startups or tech-driven startups and with enough planning and having built an app or application enough before quitting your job or during college final year with co-founders, the runway still could be 12–24 months and depends on the pedigree of founders, their connections before raising the very first round.

*For some startups, this could be under 6 months if the founders are with MIT/Stanford/Harvard combination or IIT/IIM/ISB in India. Connections matter and help too for all.

• For non-tech startups, your runway can be 24 months or more as it involves physical products, hardware, testing, manufacturing ( even if it is outsourced), compliances, distribution, and a physical team to deploy or sell.
• If you don’t have funds to last this period think twice before starting.
• Not just that, you will have to raise the next round as the burn rate increases and you will have to get on to a new runway OR extend your runway by generating revenues and reducing the monthly burn rate.

*Alternatively, you are smart and have a great product with customers buying up regularly, along with a little luck you grow your company with an extended runway for many years being bootstrapped.

*If your runway is short or the company doesn’t take off ( meaning little revenues or repeated customers as you don’t have a product-market fit), then move on and find a different runway of your life. This could be your job in your earlier company or try again in a different startup.

*If you are already a funded startup, your runway= current cash balance in your bank account/ net burn rate.

You have to take off in the right direction too with a few pivots as necessary. Also, land safely with exits or an IPO with perseverance and some luck.

Please connect if you are bootstrapped.

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