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Burn Multiple Calculator
David Sacks' SaaS efficiency metric — net burn divided by net new ARR. The number every SaaS investor checks before writing a check.
Burn Multiple — formula and benchmarks
The Burn Multiple measures how much cash you burn to generate $1 of new ARR. Coined by David Sacks (Craft Ventures), it has become the dominant SaaS efficiency metric for 2024-2026 fundraises — replacing the more easily-gamed CAC payback.
The formula
Burn Multiple = net burn / net new ARR # Per quarter or per year — same formula, just match the periods.
What healthy numbers look like
- Under 1×: Amazing. PMF clearly past, capital-efficient growth.
- 1-1.5×: Great. Top-quartile public SaaS at scale.
- 1.5-2×: Good. Typical for healthy growth-stage SaaS.
- 2-3×: Suspect. Investigate the funnel before scaling.
- >3×: Bad. Either cut burn or fix conversion — likely cannot raise at decent terms.
Common mistakes the calculator avoids
- Using gross burn instead of net burn — overstates the multiple.
- Including expansion ARR as new ARR — net new ARR = new logos + expansion − churn − contraction.
- Annualizing best quarter — use trailing 4 quarters for stable trend.
- Ignoring market context — 2× burn multiple in a hot category is normal; in a saturated one is alarming.
How to use this calculator
Two numbers from your finance + ARR tracker. Investor-facing, so be conservative.
Calculate net burn for the period
Cash out − cash in (including revenue). Use the actual cash flow, not P&L.
Calculate net new ARR
New ARR + expansion − contraction − churned ARR. Same period as burn.
Divide
Net burn / net new ARR = the multiple.
Compare to benchmarks
Under 2× = healthy. Over 3× = either fix burn or fix funnel before raising.
Trend it quarter-over-quarter
A single quarter is noisy. The trend is what investors actually look at.
Frequently asked questions
Under 1× is best-in-class (top-decile). 1-2× is healthy and typical for growth-stage SaaS. 2-3× is suspect and investors will dig in. Above 3× is a red flag for Series B+ fundraising.
Burn Multiple includes ALL cash burn (engineering, ops, overhead), not just acquisition. CAC payback only measures customer-acquisition efficiency. Burn Multiple is harder to game because you cannot exclude expenses.
Burn Multiple = net burn / net new ARR. Net burn = actual cash out minus cash in. Net new ARR = new logo ARR + expansion − contraction − churn. Use the same period for both (typically quarterly or annual).
Net burn — actual cash decrease in the period. Gross burn (total expenses) ignores incoming revenue, which makes companies with revenue look identical to pre-revenue companies. Investors use net.
Yes — if you are profitable AND growing ARR. Negative burn multiple means cash is growing AND revenue is growing. This is the holy grail and almost no SaaS achieves it before $50M+ ARR.
Hugely. In 2024-2026, investors weight Burn Multiple heavily — often more than headline growth rate. A 50% growth at 4× burn multiple is harder to raise than 30% growth at 1.5×. The math has to make sense at the next round.
