What is Burn Multiple?
Also known as: Burn efficiency, capital efficiency ratio
Burn Multiple is net cash burn divided by net new ARR. Popularized by Craft Ventures, it captures how many dollars of investor capital you are spending to add a dollar of recurring revenue.
What is Burn Multiple?
A Burn Multiple of 1.0 means you spent $1 of capital to add $1 of new ARR. Lower is more efficient. In tight capital markets, this is the headline metric for "is this business scaling efficiently?"
How to calculate Burn Multiple
Burn Multiple = Net Burn / Net New ARR
Net Burn = total cash burned over the period (operating expenses − revenue). Net New ARR = New ARR + Expansion ARR − Contraction ARR − Churn ARR.
Benchmarks (per Craft Ventures)
- <1.0 — "amazing"
- 1.0–1.5 — "great"
- 1.5–2.0 — "good"
- 2.0–3.0 — "suspect"
- >3.0 — "bad"
Public SaaS leaders cluster around 1.0–1.5 in growth mode.
Why it matters
It is harder to game than growth or efficiency alone — it forces you to think about both. Boards in 2024-26 expect this number in every monthly pack. If yours is climbing, expect a hard conversation about S&M spend.