The fact that we were on Zoom couldn't hide the investors' reactions ' a few faces turned decidedly pale. As an angel investor, I've faced variations of this scenario, some more consequential than others. Fortunately, it doesn't happen often. Just as airplanes need a runway to be of a minimum length to safely take off and land, startups must have sufficient cash to reach product-market fit. I'm using 'runway' as a metaphor to describe how much cash a company has at its disposal to operate before it runs out of money. A plane's size and weight dictates how long a runway it requires. Likewise, the amount of cash runway a startup needs varies by what it is doing. A life science company that is looking for FDA approvals usually needs more than a SaaS startup. It's critical to determine as accurately as possible the runway you'll require, adding in contingency funds for unexpected challenges. Otherwise, if your company runs low on cash, you risk a 'fire sale' price for the business. Or...
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