Distinct from burn rate and runway, which measure how much cash is left — burn multiple measures capital efficiency, independent of how much cash remains in the bank.
How it works
Net burn divided by net new ARR for the same period gives the burn multiple — David Sacks’ published scale reads under 1x as “amazing,” up through above 3x as “bad.”
What this does not include
Burn multiple benchmarks vary meaningfully by funding stage — an early-stage company is generally expected to run a higher burn multiple than a later-stage one with more established unit economics.
How to use this calculator
- Enter net burn and net new ARR for the same period.
A worked example
Net burn $600,000 against net new ARR of $1,200,000: burn multiple = 600,000 ÷ 1,200,000 = 0.5 — a “good” reading, meaning less than a dollar is burned for every dollar of new recurring revenue gained.
What the variables mean
| Variable | Meaning |
|---|---|
| Net burn | Cash spent beyond revenue for the period |
| Net new ARR | New annual recurring revenue added during the same period |
Edge cases worth knowing
A lower burn multiple means more efficient growth — a value below 1 means each dollar of cash burned generates more than a dollar of new recurring revenue, generally considered a strong efficiency signal for SaaS companies.
Zero net new ARR makes the multiple undefined — there’s no revenue growth to divide burn against, so the calculator returns no result.
Frequently asked questions
Why has burn multiple become such a closely watched metric?
It cuts through vanity growth metrics to show real capital efficiency — some investors now check it before looking at raw ARR growth, since fast growth funded by extreme burn isn’t necessarily healthy.
What’s a typical burn multiple by stage?
Roughly 2-3x is typical at seed stage, narrowing toward 1-1.5x by Series A and below 1x for efficient, later-stage companies, though ranges vary by source and market conditions.
Can burn multiple be negative?
Yes, if net burn is negative (the company is cash-flow positive) — a burn multiple below zero indicates the company is actually generating cash while still growing ARR.
