Burn MultipleCalculator
Calculate your capital efficiency instantly. Compare your burn multiple to industry benchmarks by funding stage and understand your growth efficiency.
Calculate Your Burn Multiple
Enter your monthly burn rate and net new ARR
Cash spent minus cash received in a typical month
New ARR + Expansion - Churn - Contraction
Lower burn multiple = more efficient growth. Under 1x is excellent, over 3x typically signals inefficiency.
Your Burn Multiple
Capital efficiency analysis
Pro Tip
Outstanding efficiency! You're generating more ARR than you're spending. Consider whether you could grow faster with more investment.
Benchmarks by Funding Stage
Seed
Higher burn acceptable during product-market fit
Series A
Efficiency improving as go-to-market scales
Series B
Capital efficiency becomes critical
Series C+
Approaching profitability expectations
How to Improve Your Burn Multiple
Reduce the Numerator (Burn)
Increase the Denominator (ARR)
Common Burn Multiple Mistakes
Using Gross Burn
Always use net burn (cash out - cash in), not gross burn which ignores revenue.
Excluding Churn
Net new ARR must account for churn and contraction, not just new bookings.
Single Month Data
Use 3-6 month averages to smooth seasonality and one-time events.
Ignoring Context
A 3x burn multiple at Seed is different than at Series C. Stage matters.
Chasing Low Burn
Under-investing to show good burn multiple can harm long-term growth.
Gaming the Metric
Pushing revenue forward or delaying costs distorts the true picture.
Frequently Asked Questions
What is burn multiple?
Burn multiple measures capital efficiency by dividing net burn rate by net new ARR. It shows how much you spend to generate each dollar of new recurring revenue. A burn multiple of 2x means you spend $2 to generate $1 of new ARR.
What is a good burn multiple?
Under 1x is excellent (rare, highly efficient). 1-1.5x is great (Series B+ level). 1.5-2x is good (healthy Series A). 2-3x is fair (early stage acceptable). Over 3x is concerning unless very early stage.
How do I calculate net burn rate?
Net Burn Rate = Cash spent - Cash received in a month. If you spent $500K and received $200K revenue, your net burn is $300K. This is different from gross burn which ignores revenue.
What is net new ARR?
Net New ARR = New ARR + Expansion ARR - Churn ARR - Contraction ARR. It represents the net change in your annual recurring revenue after accounting for all additions and losses.
Why does burn multiple matter to investors?
Burn multiple reveals growth efficiency. Lower burn multiples mean less capital needed to reach the same growth targets, resulting in less dilution for founders and better returns for investors.
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