Burn Multiple Calculator

About this calculator

The burn multiple — popularized by investor David Sacks of Craft Ventures — measures how efficiently a startup converts cash spent into growth: Burn Multiple = Net Cash Burned ÷ Net New ARR added over the same period. It answers a simple question: how many dollars did it cost to add one dollar of new annual recurring revenue?

Lower is better — a burn multiple under 1 is considered excellent, 1 to 1.5 good, and anything above 2 or 3 signals inefficient growth that VCs and founders view as a red flag, especially compared to simpler metrics like growth rate alone, which don’t account for capital efficiency. Startup founders, CFOs, and investors use the burn multiple to judge whether a company’s growth is worth the cash it consumes. This calculator takes your net burn and net new ARR and returns the burn multiple with an efficiency rating.