Burn Multiple Calculator
Burn multiple (David Sacks) measures how much you burn to add each unit of new ARR. Lower is better; investors use it to compare capital efficiency.
Your numbers
RESULT
Burn multiple
1.5×
- Burn per $1 of new ARR
- $1.5
Good (1.5–2×)
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- Burn multiple = Net burn ÷ Net new ARR (same period)
- < 1× amazing · 1–1.5× great · 1.5–2× good · 2–3× suspect · > 3× bad
Frequently asked questions
What is a good burn multiple?
Under 1.5× is considered efficient for growth-stage SaaS; under 1× is exceptional. Early-stage companies often run higher while finding product-market fit.
Which period should I use?
A quarter or a trailing twelve months smooths out lumpy months. Use the same period for burn and ARR.
What if net new ARR is negative?
Then the company is burning cash while shrinking — the burn multiple is not meaningful and is a serious warning sign.
Results are estimates for planning and education — not financial, legal or tax advice.
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