Burn multiple measures the cost of generating each dollar of net new ARR by dividing net cash burn by net new ARR in a given period. It is an efficiency metric that tells investors how capital-intensive the company growth is. Lower burn multiples indicate more efficient growth. Unlike the magic number, burn multiple uses total net burn (not just sales and marketing spend), giving a more holistic view of capital efficiency.
Lower is better. Shows how much cash you burn to generate each dollar of new ARR.
< 1x is excellent (rare); 1-2x is good; 2-3x is acceptable early stage; > 3x needs attention.
Net burn $600k; Net new ARR $400k → Burn multiple = 600/400 = 1.5x.
Using gross burn instead of net; not annualizing properly; ignoring one-time costs.
Financials slide: burn multiple trend showing improving efficiency.
Burn multiple 1.5x, down from 2.8x a year ago.
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