Free ForeverNo SignupCapital EfficiencyUpdated 2026

Burn Multiple Calculator

Measure how efficiently your startup converts cash burn into new ARR — the capital efficiency metric investors care most about.

Burn Multiple = Net Cash Burn ÷ Net New ARR. Invented by David Sacks, it measures how many dollars you burn to generate $1 of new ARR. A burn multiple of 1× means you spend $1 to earn $1 of ARR. Below 1× is exceptional. Above 4× raises serious concerns about capital efficiency.

Monthly Net Burn

Monthly expenses minus monthly revenue (cash drain)

Net New ARR (Monthly)

New ARR added this month (new customers + expansion - churn)

The Formula

Burn Multiple = (Net Burn × 12) ÷ (Net New ARR × 12)

In plain English

Divide annualised net cash burn by annualised net new ARR.

Worked Example

($400K × 12) ÷ ($150K × 12) = $4.8M ÷ $1.8M = 2.7× burn multiple.

Burn Multiple — The Post-2022 Investor Standard

Before 2022, investors focused primarily on growth rate. The market correction changed that — burn multiple became a central diligence metric. Companies that couldn't demonstrate efficient ARR generation struggled to fundraise regardless of growth rate.

The best companies achieve burn multiples below 1× while maintaining 50%+ ARR growth — meaning they generate more ARR value than they burn in cash, even while investing heavily in growth.

< 1×

Best-in-class burn multiple

1–2×

Acceptable — fundable at Series B

2–4×

Concerning — needs explanation

> 4×

Unsustainable — restructure required

Burn Multiple Benchmarks (2026)

Burn Multiple	Efficiency	Investor Signal
< 1×	Exceptional	Series B/C ready
1–2×	Good	Fundable
2–4×	Elevated	Requires justification
> 4×	Unsustainable	Fix before next round

Source: David Sacks "Burn Multiple" Framework · Bessemer Venture Partners 2024

Common Mistakes

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Using gross burn instead of net burn

Burn multiple uses net burn (expenses − revenue). Using gross burn ignores revenue contribution and overstates the multiple for companies with meaningful revenue.

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Including non-recurring ARR in new ARR

New ARR should be recurring, contracted subscription revenue. One-time fees inflate ARR and make burn multiple look better than it is.

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Optimising burn multiple by cutting growth spend

You can lower burn multiple by cutting S&M — but that just means slower growth. The goal is to grow ARR faster per dollar spent, not to stop spending.