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Burn Multiple & Capital Efficiency Calculator

Burn multiple from net burn over net-new ARR in the same period.

Page updated 2026-09-14.

Burn Multiple & Capital Efficiency Calculator visual
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Calculator

Cash out minus cash in. Default $180,000.

Default $120,000.

Calculated Results

Burn multiple

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ARR per $1 burned

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How much cash it costs to buy $1 of new ARR

Burning $180,000 in net cash to generate $120,000 in net new ARR gives a burn multiple of 1.50 -- $1.50 spent for every $1 of new annualized recurring revenue. Inverted, that's $0.67 of new ARR generated per dollar burned.

Lower burn multiples are better: a multiple under 1.0 means the company is generating more than a dollar of new ARR for every dollar burned, which is considered highly efficient; multiples above 2-3x are generally viewed as a red flag by investors, especially at later funding stages where efficiency is expected to improve, not worsen.

This metric is intentionally simple -- it's net burn divided by net new ARR for a single period, not a lifetime or cumulative figure, so it can swing meaningfully quarter to quarter based on the timing of expansion revenue or a big new-logo push.

When this number gets misleading

Net burn / net new ARR. Negative new ARR is flagged. Not a fundraising model. If net new ARR is negative (more churn and contraction than new business in the period), the calculator flags it rather than showing a burn multiple, since a negative denominator produces a meaningless or misleading ratio.

A single unusually large or small deal closing right at period boundaries can swing this ratio significantly quarter to quarter -- trend it over several periods rather than reacting to one quarter's number.

This measures capital efficiency of growth spend, not overall runway -- pair it with a cash-runway view like the Emergency Fund Savings Goal Calculator's logic (applied to company cash instead of personal savings) to see how long the current burn rate can be sustained.

Related SaaS efficiency metrics

The magic number and burn multiple answer closely related questions from different angles -- see the SaaS Magic Number Calculator for the sales-and-marketing-specific version of capital efficiency.

Growth and profitability together are captured by the SaaS Rule of 40 Calculator, which is a useful complement since burn multiple alone doesn't account for growth rate.

Frequently Asked Questions (FAQ)

How is the 1.50 burn multiple calculated?

Burn multiple = net burn / net new ARR = $180,000 / $120,000 = 1.50, meaning $1.50 was spent for every $1 of new annualized recurring revenue added in the period.

What counts as a good burn multiple?

Below 1.0 is considered excellent (more new ARR generated than cash burned), 1-2x is common for growth-stage companies, and above 3x is typically viewed as inefficient, especially for later-stage companies where efficiency expectations rise.

What happens if net new ARR is negative in a period?

Net burn / net new ARR. Negative new ARR is flagged. Not a fundraising model. The calculator flags this rather than computing a ratio, since dividing burn by a negative number produces a result that doesn't mean what a normal burn multiple means -- negative net new ARR is itself the more urgent problem to address.

Is this the same as a cash runway calculation?

No. Burn multiple measures how efficiently cash burn converts to new revenue, not how many months of cash remain. A company can have an excellent burn multiple and still be running low on runway if the absolute cash balance is small.

Should this be measured monthly, quarterly, or annually?

Quarterly is the most common cadence, since it smooths out some month-to-month lumpiness in deal closings while still being timely enough to catch efficiency trends before they compound over a full year.

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