Burn Multiple Calculator

What is Burn Multiple?

Burn multiple divides net burn by net new ARR. It answers how many dollars of cash burn are required to produce each dollar of net new ARR, a capital-efficiency lens popular with growth investors.

Formula

Version v1. See methodology and the public formula repo for sources and change history.

Worked example

Using the default example inputs (Net burn: $500,000; Net new ARR: $1,000,000), Burn Multiple equals 0.5:1 (Burn multiple). Lower burn multiples indicate more capital-efficient growth.

What good looks like

Lower multiples indicate more efficient growth. High multiples are tolerable at very early stage but should improve as the model matures. Compare alongside runway and Rule of 40.

Directional guidance only, not a cohort benchmark claim. Premium cohort bands appear when sample thresholds are met for your profile.

Read the Burn Multiple benchmark guide for methodology, cohort percentiles, and how participant bands differ from public guidance.

FAQ

What is Burn Multiple?

Burn multiple divides net burn by net new ARR. It answers how many dollars of cash burn are required to produce each dollar of net new ARR, a capital-efficiency lens popular with growth investors.

What is the Burn Multiple formula?

Burn multiple = Net burn / Net new ARR

What counts as net burn?

Cash operating outflows minus inflows in the period, or EBITDA losses depending on your finance convention. Stay consistent.

Burn multiple vs magic number?

Both link spend to ARR; burn multiple uses net burn while magic number uses S&M spend and quarterly ARR deltas.

Can burn multiple be below 1?

Yes when you are profitable or cash-flow positive while still adding ARR, a strong signal if durable.