Burn multiple is the SaaS capital efficiency metric popularized by David Sacks (Craft Ventures) and widely adopted by Series A/B investors after 2021.
Burn Multiple = Net Cash Burn ÷ Net New ARR
It answers: for every dollar of ARR you add, how much cash do you consume?
Why it matters more than burn rate alone
Burn rate tells you nothing without growth context. $500k/month burn at a company adding $1M/month in ARR is world-class efficiency. The same burn adding $100k/month in ARR is burning through capital dangerously.
Burn multiple combines burn and growth into a single efficiency ratio.
The rise of burn multiple post-2021
During the 2021 bull market, investors tolerated high burn for growth. Post-2022 correction, capital efficiency became a primary investment criterion.
Companies with burn multiples > 3× struggled to raise Series B in 2022–2023 even with good ARR growth. Investors repriced for efficiency.
How burn multiple complements other metrics
| Metric | What it tells you |
|---|---|
| ARR growth % | Are you growing fast? |
| Burn multiple | Are you growing efficiently? |
| NRR | Is growth sustainable? |
| Gross margin | Is the business scalable? |
Together, these four metrics paint a complete picture of SaaS health.
Calculate yours with the Burn Multiple Calculator.