Metrics
Burn Multiple
Quick definition
Net burn divided by net new ARR; a capital efficiency metric.
Burn Multiple = Net Burn / Net New ARR. Popularized by David Sacks. Under 1x is outstanding; 1-2x is healthy; over 3x is poor capital efficiency.
See this in action
Insights, guides, and tools where Burn Multiple shows up.
Frequently asked questions
- What is Burn Multiple?
- Burn Multiple = Net Burn / Net New ARR. Popularized by David Sacks. Under 1x is outstanding; 1-2x is healthy; over 3x is poor capital efficiency.
- Why is Burn Multiple important for startups?
- Burn Multiple is a metrics concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.
- What category does Burn Multiple belong to?
- Burn Multiple is a Metrics term in the StartupCFO finance glossary, alongside other metrics concepts that founders, CFOs, and accountants use in startup operations and reporting.
- Where can I learn more about Burn Multiple?
- Beyond this definition, see the related metrics terms below, or explore StartupCFO's insights and tools that put Burn Multiple in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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