Most founders calculate runway using a simple formula: Cash on hand ÷ Average monthly burn rate. The problem is that this formula can mislead you in three different ways—and all of them point in the same direction: making you believe you have more time than you actually do.

Markets have been highly volatile recently. Some startups spend years working toward a successful IPO, only to see their share prices peak shortly after listing. Many people ask: “Isn’t the company still growing?” “Isn’t the industry highly promising?” “If the company has successfully gone public, shouldn’t its early investors have made substantial returns?” The reality is: A successful IPO does not mean that investors in every funding round will make money.