Burn Multiple Calculator
Measure capital efficiency the way investors do. Built on David Sacks framework: how many dollars of burn for each dollar of net new ARR.
Inputs
Pick a period, then enter your actual numbers for that window.
Annualized revenue from logos that closed this period
Net upgrades from existing customers
Cancellations and downgrades
All operating + capex outflows
Services revenue, grants - not financing
Sacks burn multiple benchmarks
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Frequently asked questions
What is the burn multiple?+
Burn multiple is a capital efficiency metric coined by David Sacks. It measures how much cash a startup burns to generate each new dollar of annual recurring revenue. Formula: Net Burn / Net New ARR. A burn multiple of 1 means you burn $1 to add $1 of ARR. A burn multiple of 5 means you burn $5 for each new $1 of ARR. Lower is better.
What is a good burn multiple?+
David Sacks original benchmarks: under 1 is amazing, 1 to 1.5 is great, 1.5 to 2 is good, 2 to 3 is suspect, over 3 is bad. Investors weight this heavily in the current funding climate because it captures everything: pricing, churn, sales efficiency, and product-market fit in a single number. Top-tier SaaS companies routinely run burn multiples between 0.5 and 1.5 once they have product-market fit.
How is burn multiple different from CAC and LTV:CAC?+
CAC measures the cost of acquiring one new customer. LTV:CAC compares the long-term value of a customer to that acquisition cost. Burn multiple looks at the entire business: it includes engineering salaries, infrastructure, churn losses, expansion revenue, and everything else. It is the most honest measure of whether the business as a whole is being efficient with capital, not just whether the marketing team is efficient.
How do I calculate net new ARR?+
Net New ARR = New ARR (from new customers) + Expansion ARR (from upsells) - Churn ARR (from cancellations and downgrades). For example, if you added $200K in new logos, $50K in upsells, and lost $30K to churn, your Net New ARR is $220K. Always use ARR (annualized) not MRR for the burn multiple calculation - this is the convention investors use.
How do I calculate net burn?+
Net Burn = Cash spent in the period - Cash received in the period. For most SaaS startups this equals operating losses plus capital expenditures, minus any non-recurring inflows. Use a quarterly or annual window to smooth out spikes. Do not subtract financing inflows like venture capital rounds, since those distort the operational efficiency picture.
How do I improve my burn multiple?+
Five levers: (1) Reduce churn - the largest leak. (2) Move to annual contracts to lock in revenue. (3) Cut underperforming paid channels. (4) Raise prices on new customers. (5) Trim engineering and ops headcount in areas that are not directly contributing to ARR growth. Burn multiple is sensitive to all five, and you usually need to push 2 or 3 levers at once to move the needle meaningfully.
Why do VCs care about burn multiple in 2026?+
After the zero-interest-rate era ended, growth-at-all-costs is dead. Investors now expect capital efficiency alongside growth. Burn multiple is the cleanest way to compare a company that grew 80 percent with a $20M burn against one that grew 60 percent with a $5M burn - the second is usually the better business. It also predicts how much you will need to raise to hit the next milestone, which determines whether you can survive a tough fundraising market.