How many months will the company survive: counting runway between tranches in defence tech

«We had a signed $600K grant and a feeling everything was under control. Then the tranche slipped three months, and the component prepayment was due yesterday. We nearly stopped development — not because there was no money, but because nobody was counting when it would actually arrive.»

This is a typical situation in defence tech. The money seems to be there — in grants, contracts, an investor agreement. But on a given Tuesday the account may be empty. The gap between «there on paper» and «there in the account» is described by one number: runway. And it is runway, not the sum of signed deals, that tells you how much time the company has left.

What runway is and why it's the main thing

Runway is the number of months the company survives at its current spend if no new money comes in. The formula is simple: cash in the accounts divided by monthly net burn (how much cash the company spends per month).

$180K in the accounts and $30K net burn a month is 6 months of runway. In that time you either close the next tranche or reach break-even. The number feels abstract until you realise it tells you exactly how many attempts you have left. Every decision — hire an engineer, order a batch of components, open a new direction — is minus weeks or months of runway. Until you see that figure, you make these decisions blind.

Why runway is trickier in defence tech

In an ordinary business inflows are more or less even. In defence tech they are not, and that changes everything.

Tranches arrive in large chunks and almost always later than promised: approvals, committees and bureaucracy add months. Components — drones, optics, electronics — are often prepaid and in foreign currency: you pay in euros today, the finished unit is three months away, and all that time the money is frozen in transit. Government contracts pay after delivery and acceptance, so you finance production out of your own cash for months, and payment arrives once you have already spent everything on materials and salaries. Average burn therefore tells you nothing — what matters is the schedule, week by week: which payment goes out when and which tranche comes in when.

How to count it honestly

The danger is not the burn itself but the gap between the moment the money runs out and the moment a tranche actually lands. A company with «6 months of runway» goes bankrupt at month 6 if the tranche it counted on at month 4 is stuck in approvals.

Let's work it through month by month

Take the same company with $180K and a $30K burn. In month 3 a $50K prepayment for a batch of components is due — a one-off payment on top of the usual burn. If the $150K tranche arrives as promised in month 4, the picture holds: after the prepayment the account is thin, but the tranche tops it up in time. Now imagine the tranche slips to month 7. After the prepayment in month 3 ($180K − $90K of burn over three months − $50K prepayment = $40K), the company enters month 4 with just $40K against a $30K burn. By month 5 it's at zero, by month 6 in the red, and no amount of «$150K somewhere in transit» saves it: salaries are due on a date, not when the tranche clears.

«Grants on paper don't pay salaries. Cash in the account on a specific date does — and it's that calendar that decides whether the company lives.»

What lengthens and what shortens runway

Shorteners: component prepayments, a jump in the euro rate on a purchase, hiring before a contract is signed, downtime between prototype and series when the team is already large but there's no revenue yet. Lengtheners: a contract advance instead of full payment on delivery, splitting purchases into stages instead of one large prepayment, keeping part of the cash in reserve against currency swings, arranging interim tranches instead of one big payment at the end.

The key is to see not one average number but a calendar. Then the cash gap is visible months ahead and you have time to act: ask for an advance, split a purchase, hold off on hiring, talk to the donor about the schedule. A decision made three months before zero is almost always cheaper and calmer than an emergency one.

What it looks like in real life

The warning signs are audible in typical phrases. «The grant is signed, so we're fine» — while nobody knows exactly when the money arrives. «We have to order the components now or we'll miss the deadline» — while the prepayment knocks out a month of runway. «They'll pay after delivery» — and delivery is three months away, and for all three months you carry salaries and materials yourself. «We have a million in the contract pipeline» — while the account holds two months of cash. Each of these lines is about the gap between paper money and the real payment calendar.

How to keep it under control

Runway can't be counted by hand in Excel when inflows are uneven and payments are in several currencies. In Finmap the payment calendar shows upcoming outflows and inflows by date, the cash-flow report shows when the account will touch zero at the current plan, and multi-currency accounting brings euro, dollar and hryvnia into one picture. You see not «how much on average» but «which date it gets tight» — and you can play out scenarios: what happens if the tranche slips by one month, two, three.

Related — the cash gap on a government contract and how to account for buying components abroad in several currencies.

A few rules that save you

• Plan not by the promised date but by the promised date plus the usual delay. In defence tech there almost always is one, and building it in is realism, not pessimism.
• Keep a currency reserve: a rate jump on a component prepayment can eat a month of runway.
• Negotiate advances and interim tranches. One large payment at the end is the worst structure for cash.
• Split large purchases into stages so you don't knock out months of runway with a single prepayment.
• Look at runway weekly, not when the account is already alarming. A decision three months before zero costs several times less than an emergency one.

In defence tech the survivors are not those with the most grants on paper, but those who know exactly which date the money runs out — and act in advance. Runway is not an accounting formality but the main survival metric, and you should look at it as often as at the progress of the development itself.

Money Doesn't Disappear. You Just Don't See It.

Try Finmap free for 14 days and see your runway by date — when a tranche lands, when a prepayment goes out and when the account gets thin.