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Burn Multiple
Calculator
Gauge your startup's capital efficiency. See exactly how much cash you are burning to generate every new dollar of ARR.
- Auto Grid Scoring
- VC Benchmarks
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ARR Growth
ARR at the beginning of the period.
ARR at the end of the period.
Cash Burn
Total cash depleted over the identical period.
Ending ARR - Starting ARR
Standard venture-backed efficiency. Monitor costs to ensure ratio doesn't drift upward.
VC Benchmark Scale
What is the Burn Multiple?
Coined by David Sacks (Craft Ventures), the Burn Multiple evaluates startup capital efficiency. Rather than tracking pure cash burn, it measures how much money you spend to generate each new dollar of Annual Recurring Revenue (ARR).
The Formula
Burn Rate vs Burn Multiple
Investors don't just care that you are burning cash; they expect startups to burn cash. What they care about is Return on Burn.
If two startups both burn $1M a month, they look identical on a spreadsheet's expense column. However, if Startup A generated $1M in Net New ARR, while Startup B generated only $200k, Startup A is a growth engine, while Startup B is fundamentally broken. The Burn Multiple instantly exposes this difference.
It Evaluates Everything
Unlike CAC which only looks at Sales & Marketing, Burn Multiple incorporates engineering, G&A, and infrastructure costs.
Normalizes Market Cycles
In bull markets growth is easy. In bear markets capital is expensive. Burn Multiple proves resilient business models regardless of the climate.
The Ultimate VC Filter
Modern investors use this ratio as the fastest heuristic to determine if your startup is a "fund returner" or a sinking ship.
Efficiency FAQ
Is Burn Multiple calculated Monthly, Quarterly, or Annually?
It can be calculated over any period, but it is most effective when evaluated Quarterly and Annually. Monthly data can be noisy due to varied billing cycles or specific marketing campaigns. Ensure that the period constraint for Net Burn perfectly matches the timeline used to calculate Net New ARR.
Should early stage (Seed) startups worry about Burn Multiple?
Seed startups often have terrible Burn Multiples because they are investing heavily in engineering before having a go-to-market engine. VCs accept this. However, as you approach Series A and look to scale, the multiple must rapidly compress into the "Good" or "Great" territory.
Is it possible to have a negative Burn Multiple?
Yes. If a startup is cash flow positive (generating more cash than it spends) while still adding Net New ARR, the Burn Multiple becomes negative or zero. This is the ultimate dream scenario for sustainable growth.