Startup Metrics
Burn Multiple Calculator
Calculate burn multiple to assess how efficiently a startup converts burned capital into ARR growth.
Monthly Metrics
= $6.0M annual burn
New ARR minus churn
Revenue Breakdown
Burn Multiple Analysis
Grade
Good
1.25
burn multiple
What the burn multiple means
Elite
Creating $2+ ARR for every $1 burned
Strong
$1 ARR per $1 burned — excellent efficiency
Good
Solid growth efficiency, room to improve
Acceptable
Burning $1.5–2 per $1 new ARR
Concerning
Too much burn relative to ARR growth
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How to Use This Tool
Enter the company's net burn (cash spent minus cash earned) and net new ARR added in the same period. The calculator produces the burn multiple — how efficiently the company converts cash into recurring revenue.
Burn Multiple
Burn Multiple = Net Burn ÷ Net New ARR
If a company burns $5,000,000 and adds $2,500,000 in net new ARR, the burn multiple is 2x. Lower is better — it means you're generating revenue efficiently.
Why This Matters
Burn multiple has become the go-to efficiency metric for SaaS investors. It answers a simple question: how much cash does it take to generate $1 of new ARR? In the 2021 zero-interest-rate era, burn multiples of 5–10x were tolerated. Today, investors want to see 1–2x. It's the metric that separates capital-efficient companies from cash incinerators.
Industry Benchmarks
Amazing
< 1x
Generating ARR faster than burning cash
Good
1–2x
Efficient growth, attractive to investors
Concerning
> 3x
Burning too much cash per dollar of ARR
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