Runway is how long a company can operate before its cash runs out: the cash balance divided by the monthly burn rate. It sets when the next funding round has to happen.
What the video says
In venture capital, a startup can have millions in the bank, and be months from empty. The number is the runway. How long until the cash runs out. Say a startup raises twelve million. Each month, it spends one million more than it earns. That's its burn rate. Twelve divided by one. Twelve months of runway. Then it hires. Burn doubles to two million. Same bank balance. Now it's six months. And a new round has to happen before that clock runs out. Nobody bargains well with no cash left. So why do investors care? A short runway can force a raise at a lower price. And that costs earlier investors. Don't ask what's in the bank. Ask how many months.
In the glossary: Runway
A simple example with round numbers, not advice. Terms vary by fund.
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