How to Use Burn Multiple Calculator
The Burn Multiple Calculator takes your monthly net cash burn and divides it by the net new ARR you generate each month. A lower burn multiple means more efficient growth. It also annualizes both figures so you can see the full-year picture at a glance.
What It Does
Use the calculator with intent
The Burn Multiple Calculator takes your monthly net cash burn and divides it by the net new ARR you generate each month. A lower burn multiple means more efficient growth. It also annualizes both figures so you can see the full-year picture at a glance.
Startup founders preparing for fundraising, CFOs tracking capital efficiency, and investors evaluating portfolio companies. David Sacks popularized this metric as a single-number summary of spend efficiency.
Interpreting Results
Focus on the burn multiple number and its verdict. A burn multiple below 2x generally satisfies investors. If yours is above 3x, you are spending too much relative to the revenue you are generating.
Input Steps
Field by field
- 1
Net Burn Monthly
Enter your monthly net cash burn in dollars. This is total operating expenses minus any revenue. If you are cash-flow positive, your burn is zero.
- 2
Net New ARR Monthly
Enter the net new annual recurring revenue added each month. This includes new customer ARR plus expansion ARR minus contraction and churn.
- 3
Results
Review the burn multiple and verdict. Below 1x is amazing, 1-1.5x is great, 1.5-2x is good, 2-3x is concerning, and above 3x signals unsustainable spending.
Common Scenarios
Use realistic starting points
Efficient early-stage startup
Net Burn Monthly
$50,000
Net New ARR Monthly
$40,000
Burn multiple of 1.25x is excellent. This means every dollar burned generates $0.80 of new ARR, which is very capital-efficient.
Scaling company with high burn
Net Burn Monthly
$200,000
Net New ARR Monthly
$60,000
Burn multiple above 3x signals that growth spend is outpacing results. Investigate which channels or initiatives are underperforming.
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Startup Runway Calculator
Calculate months of runway from cash, burn rate, and revenue growth assumptions.
FAQ
Questions people ask next
The short answers readers usually want after the first pass.
Sources & References
- The Burn Multiple — Craft Ventures (David Sacks)
- Burn Multiple Explained — Investopedia
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