Burn Multiple Calculator
Divide the cash you burned in a period by the net new ARR you added in the same period — the burn multiple shows how many dollars you spend to buy each dollar of durable recurring revenue.
Reviewed by the CalcCafe editorial team · Last updated 18 July 2026 · How we test our tools
Example
Suppose your startup burned a net $2,000,000 over the last year and added $1,500,000 of net new ARR in the same year. Burn multiple = 2,000,000 ÷ 1,500,000 ≈ 1.33x — you spent $1.33 for every $1 of new recurring revenue, which lands in the Great (1 to 1.5x) band on the Sacks scale. If churn had eaten $500,000 more of that ARR, net new ARR would drop to $1M and the multiple would jump to 2.0x — same spending, much weaker verdict.
How it works
Burn multiple = net burn ÷ net new ARR, both measured over the same period. Net burn is total cash out minus total cash in (not just expenses — revenue collected reduces burn). Net new ARR = new-logo ARR + expansion ARR − contraction ARR − churned ARR, so churn directly worsens the multiple. Lower is better: a multiple under 1 means you generate more than a dollar of recurring revenue per dollar burned. A profitable company has negative or zero burn and the metric stops being meaningful — it is a scale-up efficiency metric, not a mature-company one. The tool guards against division by zero and treats empty inputs as 0.
Good to know
The burn multiple was popularized by David Sacks of Craft Ventures in 2020, and his verdict scale is the one used here: under 1x is amazing, 1-1.5x great, 1.5-2x good, 2-3x suspect, and over 3x bad for venture-stage startups. The framing is deliberately brutal: it measures the efficiency of the entire company — product, sales, marketing, G&A, everything — against the only output venture investors ultimately pay for, net new recurring revenue. Nothing is excluded and nothing can hide in an allocation footnote.
That comprehensiveness is why the burn multiple beats CAC-based metrics in downturns. CAC payback and LTV:CAC only look at sales and marketing spend, so a company can show a pristine CAC while burning cash on over-hired engineering, lavish G&A or a second office. The burn multiple catches all of it. It also uses net new ARR, so churn — which CAC math ignores entirely — directly punishes the score. In 2021, capital was cheap and multiples of 3-4x were tolerated; in the tighter markets since 2022, funds routinely screen Series B+ deals at 2x or better, and the metric has become a standard board-deck line item.
Like any single number, it can be gamed, and diligence teams know the tricks. Booking non-recurring services or pilot revenue as ARR inflates the denominator; capitalizing engineering costs or leaning on vendor financing understates net burn; measuring during a quarter with a one-off collections windfall flatters cash flow. One-time layoffs create a temporarily ugly multiple followed by a flattering one, so look at the trend over several quarters rather than a single reading. The honest version uses GAAP-consistent cash burn and a strict ARR definition — recurring, committed subscription revenue only.
Choose the measurement window deliberately. Quarterly burn multiples are responsive but noisy — a lumpy enterprise deal landing a week late can double the quarter's multiple. Trailing-twelve-month figures smooth seasonality and are the fairest single number for fundraising conversations. Stage matters too: a seed-stage company at 3x with a product still finding its market is normal, while a Series C company at 3x is spending a venture round to stand still. Expect the multiple to fall as the company scales; a multiple that rises with scale is the classic signature of saturating go-to-market channels.
Frequently asked questions
What counts as net burn and net new ARR?
Net burn is total cash out minus total cash in for the period — actual cash consumption, not accounting loss. Net new ARR is new-logo ARR plus expansion minus contraction and churn. Use the same window for both, typically a quarter or a trailing twelve months.
What is a good burn multiple?
On the David Sacks scale used here: under 1x is amazing, 1-1.5x great, 1.5-2x good, 2-3x suspect, and over 3x bad for venture-stage startups. Since 2022, many growth investors screen Series B and later deals at 2x or better. Earlier-stage companies get more slack while go-to-market is still forming.
Why use burn multiple instead of CAC payback or LTV:CAC?
CAC metrics only measure sales and marketing efficiency, so overspending elsewhere hides. Burn multiple divides total company cash burn by net new ARR, so every department's spending counts and churn directly worsens the score — it is much harder to look efficient while actually being wasteful.
Is my data uploaded anywhere?
No — this calculator runs entirely in your browser. Your burn and ARR figures never leave your device, and the page keeps working offline once loaded. It is completely free with no sign-up.
People also ask
Should I measure burn multiple quarterly or annually?
Quarterly readings are responsive but noisy — one late enterprise deal can double the number. A trailing-twelve-month burn multiple smooths seasonality and deal lumpiness and is the fairest single figure for board decks and fundraising. Track both and watch the trend, not one reading.
Can the burn multiple be gamed?
Yes — booking non-recurring services as ARR, capitalizing engineering costs, or cherry-picking a quarter with a collections windfall all flatter it. Diligence teams recompute it with GAAP-consistent cash burn and a strict recurring-revenue definition, so the honest number is the one worth managing to.
What does a burn multiple mean for a profitable company?
Once net burn is zero or negative the metric stops being informative — you are generating cash while growing, which is better than any multiple. It is designed for venture-stage companies converting invested capital into recurring revenue, not for mature cash-generating businesses.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.