Runway & Burn Modeling for VC-Backed Companies
Runway isn’t a single number — it’s a decision surface. What a real 18-month rolling forecast contains and how to build one that the board actually trusts.
The Runway Number Is Only as Good as the Model Behind It.
Every VC-backed CEO knows the runway number they'd give the board today. Most couldn't defend it under three follow-up questions. What's the assumed net new ARR by quarter? What's the assumed churn on the current base? What happens if the two open hires slip a month? What happens if they hit? These aren't unreasonable questions. They're the questions the board is going to ask, and the finance function has to be able to answer them without a two-day rebuild of the model.
A defensible runway model is a rolling 18-month forecast, refreshed monthly against actuals, with scenarios that let the CEO test the operating decisions the business is actually facing. Whether to hire the AE cluster now or wait a quarter. Whether to accelerate the AWS migration. Whether the next round starts in six months or nine. The model has to be able to answer each of those inside an hour, not become a project.
We build the model, integrate it with the accounting close so it reforecasts from real actuals, and run the monthly cadence around it. Once it's in place, the runway question is answered in seconds — and the board conversations get sharper.
What the Model Contains
Six Layers Every Real Runway Model Has.
Revenue Build From Bookings
New bookings by segment and quarter, ramped by contract terms, layered on top of the existing ARR base net of churn. Revenue is not a plug — it's the output of a build the sales team can read and agree with.
Headcount and Comp Build
Existing employees on the roster with their actual comp. Planned hires by function with target start dates and fully-loaded comp. Merit, promotion, and bonus assumptions modeled. Payroll taxes and benefits loaded.
Non-Comp Opex
Marketing spend by channel. Software and infrastructure by category. Facilities, T&E, professional fees, insurance. Each modeled with its own logic rather than a percentage-of-revenue heuristic that misleads at the extremes.
Working Capital Modeling
A/R timing based on customer payment terms. Deferred revenue based on prepayment mix. Prepaid expenses on the annual cadence. Working capital swings often move the cash number more than the P&L does.
Scenarios
Base case, upside, downside. What the board should model against. What plans B and C look like if the current quarter comes in short. The scenarios are the actual decision tool — the base case alone is not.
Cash Waterfall to Runway
Beginning cash, monthly net burn, ending cash by month. Point at which cash crosses a defined threshold. Runway in months to zero and to the fundraise cushion. All from the same integrated build.
How the Model Actually Gets Used.
Monthly reforecast. On the same close cadence as the financials. Actuals overwrite forecast. Assumptions revisited based on what the month told us. Runway number updated. Board update reflects the current view, not last quarter's.
The reforecast should take hours, not days. If it takes days, the model isn't built right and the finance function will fall behind the business it's supposed to be forecasting.
Decision analysis. When a real operating decision is on the table — new hire cluster, accelerated marketing spend, delayed capex — the model produces the runway impact within hours. That analysis becomes the input to the CEO and board decision.
Board reporting. The runway number in the board deck is the model's output. Scenarios go in the appendix. The board sees the same numbers every month with the same methodology — consistency builds trust in the finance function.
The Bad Habits We See Most.
Percentage-of-revenue drivers everywhere. Marketing at 30% of revenue. G&A at 12%. R&D at some ratio. Convenient shortcuts that hide the real structure of the spend and lie under stress.
Optimistic hiring assumptions. Every planned hire lands on the target date. Every open req fills in the assumed month. The model runs faster than the recruiting funnel actually delivers, and runway is longer than it will be in practice.
Working capital as a plug. The model assumes A/R and deferred revenue behave a certain way; the actual monthly cash movement doesn't match. Cash and P&L diverge and the board asks why.
Only one scenario. A model without downside and stress scenarios is not a decision tool. The board wants to see how sensitive runway is to the current growth assumptions; the CEO wants to know what the response plan looks like at each scenario.
If the Runway Number Isn't Defensible
The Rebuild Is Two Weeks. The Value of Getting It Right Is the Entire Hold Period.
We build the rolling forecast, integrate it with the accounting close, and run the monthly cadence. Board updates use the model's output. Decisions use its scenarios.
Tell Us the Situation
The Company and the Model.
Where the company is on ARR and runway, and what the current model does or doesn't do. Same-day response.
Schedule a Discovery Call
We’ll reach out within one business day.