Runway Cognition

runway-cognition

When to use

• A finance-partner or founder needs to read the cash runway as a shape (not a single number) and decide whether to raise, cut, or grow.
• Burn has shifted in a way the prior plan didn't anticipate; the question is whether the shift is structural (revise plan) or transient (hold).
• A fundraise window is opening or closing; the question is whether to start the process now, in one quarter, or hold and grow.
• A board / leadership debate has split between cut to extend runway and invest to accelerate; the framing — not the verdict — is what's missing.

Do NOT use for per-customer economics (route to unit-economics-modeling (O1)), forecast-call construction (route to forecasting (O2)), or multi-statement scenario construction (route to scenario-modeling (O4)).

Cognition cluster

• Mental model 21 — Second-order thinking. "If we cut here, then ___, and then ___." Runway decisions are second-order by construction: the first-order effect (extended runway) is trivial; the second-order effect (slower growth → next-round terms → dilution) is the real decision. See mental-models.md § 21.
• Mental model 28 — Inversion. "What would force a down-round?" Invert the fundraise question: instead of "can we raise?" ask "what evidence would the market need to fund us at this valuation?" and work backwards. See mental-models.md § 28.
• Mental model 16 — Leading vs lagging indicators. Cash balance is lagging; net burn trend over the last 3 fiscal-periods + pipeline coverage of next-window revenue are leading. A runway model that reads only cash balance is reading yesterday's weather. See mental-models.md § 16.
• Context-spine — org-stage + fiscal-period + product. Read the org-stage slot for what bands apply (pre-seed / seed / Series A / Series B+ / growth / public — each has a different "healthy runway" band; do not hardcode 18 months). Read fiscal-period for the cadence the runway model rolls forward against. Read product for what's GA-shippable in the window — pre-revenue product changes the cognition shape (extend until traction) vs post-revenue (extend until next milestone). See context-spine.

Procedure

Step 0: Establish the org-stage band

Read the org-stage slot. The band selection is the load-bearing choice — not the agent's. The slot answers it. Use these shapes:

• Pre-seed / seed → the band is "next milestone + buffer", not a fixed month count. Milestone = the evidence the next round will fund.
• Series A → the band is "to product-market-fit signal + buffer". Buffer ≥ one fundraise cycle (typically 6–9 months in the org's segment).
• Series B+ / growth → the band is "to next funding milestone with metric-driven evidence" (NRR, gross margin, growth rate). Buffer = one quarterly cycle.
• Public / cash-flow positive → runway converges to "operating cash + facility headroom"; the cognition shifts to working-capital reasoning.

If the slot is missing or contested, STOP and ask once. Do not infer from prose.

Step 1: Compute the burn shape, not the number

1. Net burn = net cash out over the last 3 fiscal-periods. Use 3 windows, not 1 — single-window burn is noise.
2. Burn trend: flat / accelerating / decelerating. Compute the slope. Accelerating burn is the leading indicator; flat burn at a high number is the lagging confirmation.
3. Burn-multiple (cross-cite O1 unit-economics-modeling Step 5): net burn / net new ARR over the same windows. Read direction across the 3 windows, not the point estimate.

Output is a shape: "net burn $X/mo, decelerating over last 3 quarters; burn-multiple 2.4 → 1.8 → 1.3."

Step 2: Inspect runway against the band

1. Compute months-of-runway = cash / current-burn at three burn assumptions: status-quo, +20% (overspend scenario), −20% (cuts taken).
2. Compare each to the band-appropriate target from Step 0. Do not compare to a fixed "18 months" — that's a Series-A heuristic that mis-fires at every other stage.
3. Verdict shape: "at status-quo burn, we have X months vs the Y-month band; gap is Z months." Gap, not absolute number.

Step 3: Decide on the fundraise question (or refuse to)

Three honest answers; pick one:

1. Raise now — gap is closing into the band's lower bound, and at least one fundraise-trigger condition fires (revenue milestone hit, segment proof point demonstrable, founder bandwidth available). Cross-cite Wing-3 fundraising-narrative (H7) for external-pitch shape.
2. Hold and grow — gap is comfortably inside the band AND the leading indicators (Step 1 burn-multiple direction + pipeline coverage of next-window revenue) are improving. Do not raise into a comfortable runway; the dilution math doesn't justify it.
3. Refuse to answer — the gap is in the band's noise but no leading indicator has direction. The honest answer is "I'm not ready to call this; tell me what to measure for two windows."

A cut (Step 4) is not an answer to the fundraise question; it's a separate decision.

Step 4: Decide on layoff-vs-cut-vs-grow

1. Grow — leading indicators improving + band has headroom. The cut math is dilutive (every $ cut here is a $ of capacity not built).
2. Cut non-headcount — leading indicators flat + band tightening. Tooling / contractors / venues / paid-marketing / unused real-estate first.
3. Cut headcount — band tightening into the lower bound AND leading indicators flat-or-worsening for ≥ 2 windows. Smallest cut that moves the band by ≥ 1 buffer-cycle is the right cut. "Across-the-board 10 %" is the failure mode — it cuts what's already efficient at the same rate as what's not.

The premortem (mental-model 29): "if we lay off and the leading indicators don't improve, what did we just lose?" If the answer is "the people who would have moved the indicators", the cut is wrong.

Step 5: Emit the runway frame

Produce runway-frame.md — the typed artifact scenario-modeling (O4) reads as its runway input. Per docs/guidelines/wing4-handoff.md § Chain 1 / Chain 3.

Related Skills

WHEN to use this

• The question is cash-runway shape, fundraise-timing, or cut-vs-grow.
• The decision is whether to raise, hold, or cut — at this org-stage.

WHEN NOT to use this

• Per-customer economics (CAC / LTV / payback) — route to unit-economics-modeling (O1).
• Forecast-call construction (top-down vs bottom-up) — route to forecasting (O2).
• Three-statement scenario construction — route to scenario-modeling (O4).
• External fundraise narrative — route to Wing-3 fundraising-narrative (H7); cite for pitch shape.
• People decisions (layoff process, communication, severance) — route to Wing-4 org-design (Q1) for shape; people-strategist owns process.

Wing-4 handoff: this skill reads forecast-band.json from O2 and unit-economics-frame.md from O1; emits runway-frame.md consumed by O4. Per docs/guidelines/wing4-handoff.md § Chain 1.

When the agent should load this

• "How long is our runway?"
• "Should we raise now or hold?"
• "Do we need to cut, and if so what?"
• "Wie lange reicht das Geld noch?"
• "Sind wir noch im sicheren Band für die Stage?"

Output

1. runway-frame.md (Wing-4 handoff) — org-stage, fiscal-period, current cash, net-burn trend (flat / accel / decel), burn-multiple direction, months-of-runway at 3 burn assumptions, band-appropriate target, gap, fundraise verdict (raise / hold / refuse), cut-vs-grow verdict.
2. burn-shape.md — last 3 fiscal-periods net burn + burn-multiple, with trend annotation.
3. fundraise-decision.md — which of the three verdicts (raise / hold / refuse), leading indicators read, premortem if "raise".
4. cut-or-grow.md (only if cut verdict) — non-headcount cuts first, headcount-cut shape if required, premortem on each cut.

Gotcha

• "18 months runway" is a Series-A heuristic; applying it to seed (where milestone matters more than month count) or growth (where metric milestones matter more) silently mis-frames the decision.
• Single-window net burn is noise. Always 3 windows.
• Burn-multiple direction matters more than the point estimate. A 3.0 going to 2.0 is healthier than a 1.8 going to 2.4.
• Raising into a comfortable runway is dilutive theatre — "we have 18 months so we should raise now" doesn't survive a second-order check.
• Across-the-board cuts cut efficient teams at the same rate as inefficient ones. The smallest targeted cut that moves the band wins.

Do NOT

• Do NOT compare months-of-runway against a fixed number; always against the band-appropriate target from Step 0.
• Do NOT answer the fundraise question without checking leading indicators (Step 1 + pipeline coverage).
• Do NOT collapse cut-vs-grow into a single "extend runway" verdict — they're separate decisions with separate evidence.

Runnable example

Series-A SaaS, $4.2M cash, fiscal-period quarterly.

• Step 0 — org-stage = series-a. Band: "to PMF signal + buffer 6–9 months". Target = NRR > 110 % + segment proof + 9-month cycle ≈ 12–15 months.
• Step 1 — net burn last 3 quarters: $480k / $510k / $560k → accelerating. Burn-multiple: 2.1 → 1.9 → 1.7 → improving despite accel-burn (revenue catching up).
• Step 2 — at status-quo $560k/mo: 7.5 months runway. Target band 12–15 months. Gap = 4.5–7.5 months below band.
• Step 3 — verdict = raise now. Gap closes into lower-bound; segment-proof demonstrable; burn-multiple direction is the credible story. Cross-cite H7 for pitch.
• Step 4 — grow (don't cut). Cutting now would kill the burn-multiple-improvement story; the cut math is dilutive vs the raise.
• Step 5 — emit runway-frame.md: org-stage=series-a, gap=-5mo, fundraise=raise, cut-or-grow=grow, premortem="if raise fails by Q3, structural cut to non-headcount + extend by 4 months".