This disconnect is not caused by overspending alone. It is caused by a blind spot in how founders understand cash.
The difference between survival and surprise lies in understanding not just how much cash exists, but how much of it is actually usable.
The Illusion of Cash Comfort
A startup may show a healthy balance across its accounts, sometimes spread across India and overseas entities. On paper, the company looks well-capitalised. In reality, only a portion of that cash can be deployed freely.
Founders often treat all cash as equal. It is not.
Some cash is already spoken for. Some is legally restricted. Some sits in the wrong entity or jurisdiction. Some looks available but disappears once commitments are honoured.
This is how runway quietly compresses even when revenue is growing and fundraising appears successful.
Four Types of Cash Founders Rarely Separate
The core problem is not lack of cash. It is lack of classification.
Cash balance
This is the headline number founders see on bank dashboards. It includes every rupee and dollar across all accounts, without context. It is useful for liquidity checks, but dangerous for decision-making.
Usable cash
This is the cash the business can deploy today without breaching obligations, regulations, or operational commitments. It excludes amounts earmarked for payroll, taxes, vendor contracts, and intercompany settlements.
Committed cash
This includes future obligations that are already locked in. Payroll cycles, cloud infrastructure contracts, minimum guarantees, tax payments, and deferred vendor costs fall into this category. The cash has not left the account yet, but it is no longer discretionary.
Restricted cash
This is where cross-border complexity deepens the problem. Cash held in overseas subsidiaries may be restricted by local regulations, banking covenants, or FEMA considerations. Repatriation is not always immediate or simple, even if funds technically belong to the group.
When founders collapse these four categories into a single balance, runway projections become optimistic by default.
Why This Problem Multiplies Across Borders
The blind spot becomes more dangerous when startups operate across India and overseas entities.
Cash may be sitting in a foreign subsidiary that cannot fund Indian payroll without approvals. Profits may be trapped temporarily due to withholding tax considerations. Intercompany charges may require documentation before funds can move. Local statutory timelines may delay access even when cash exists.
From the founder’s seat, the money feels close. From a finance perspective, it may be months away.
This is how teams continue hiring, committing spend, and extending runway assumptions without realising that effective cash access is shrinking.
Runway Is Not a Time Metric. It Is a Control Metric.
Runway is often described as months of survival. In practice, it is a measure of financial control.
Two startups with the same cash balance can have very different runways depending on how clearly they separate usable, committed, and restricted funds. One has optionality. The other has deadlines disguised as comfort.
This difference becomes visible during due diligence, board reviews, and funding slowdowns. Investors do not ask how much cash you have. They ask how long it lasts under realistic constraints.
Founders who cannot answer that question precisely are often forced into reactive decisions, emergency bridge rounds, or valuation compromises.
The CFO-Grade View Founders Eventually Need
CFO-grade cash visibility does not come from better spreadsheets. It comes from discipline in classification, forecasting, and entity-level understanding.
It requires knowing where cash sits, what it can legally and operationally be used for, and when it becomes unavailable. It requires aligning accounting data with real commitments, not just bank balances.
Most founders do not build this view early because it feels unnecessary. They build it later because it becomes unavoidable.
By then, runway has already shrunk.
Why This Blind Spot Explains So Many Surprises
This is why some startups appear well-funded yet constantly anxious. Why burn feels unpredictable despite stable revenue. Why decisions that looked safe at the start of the quarter feel reckless by the end.
The issue was never cash availability. It was cash understanding.
Founders who learn to see cash the way a CFO does gain something more valuable than comfort. They gain foresight.
And foresight, more than capital, is what protects runway.
