Run Rate
Definition
Run rate is a projection of a company’s future revenue based on its current performance, most often calculated by annualizing the latest month’s revenue by multiplying it by 12.
How it comes up in fundraising
Early-stage founders lean on run rate before they have a full year of history, saying they are at a “600K run rate” to describe where revenue is trending, not what has actually been billed over the past year.
Frequently asked questions
How is run rate different from ARR?
Run rate is often based on a single recent period annualized, which can overstate a one-time spike, while ARR should reflect only durable, contracted recurring revenue.
Is run rate a reliable metric for investors?
It is a useful shorthand for momentum, but sophisticated investors ask for the underlying monthly trend and contract data rather than trusting one annualized number.
Round Funded resources
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