Burn multiple

How many euros of cash you burn to add one euro of new recurring revenue. A single, brutal read on how efficiently your growth is being financed — lower is better.

In plain English

The burn multiple asks the bluntest possible question about growth: how much cash did it cost to add each euro of new annual recurring revenue? Coined by Craft Ventures' David Sacks, it divides the cash you burned in a period by the net new ARR you added in the same period. A burn multiple of 1 means you spent a euro of cash to win a euro of recurring revenue; a multiple of 2 means it took two. Because net new ARR already nets out churn, the metric captures the whole machine — not just acquisition, but product, overhead, and retention rolled into one efficiency score.

The formula

Burn multiple = Net cash burn ÷ Net new ARR (same period)

Net new ARR is the change in annual recurring revenue over the period, so churn is already baked in — a leaky base shrinks the denominator and pushes the multiple up.

A worked example

Over the year you burned €2M of net cash and added €2.5M of net new ARR.

Burn multiple = €2M ÷ €2.5M = 0.8

A multiple of 0.8 is excellent — you added more recurring revenue than the cash you spent to get it. If churn had clawed back half that ARR, leaving only €1.25M net new, the same €2M burn would give a multiple of 1.6 — still respectable, but a different story.

What's a good burn multiple?

The widely cited scale comes from Bessemer Venture Partners:

Burn multiple	Verdict	Read
< 1	Amazing	Adding ARR faster than you burn cash
1–1.5	Great	Efficient, well-financed growth
1.5–2	OK	Acceptable, room to tighten
> 2	Suspect	Burning a lot for little ARR

Lower is always more efficient. Two of the fastest levers are cutting wasted acquisition spend and reducing churn — both shrink the cash you burn while protecting the ARR you keep. It pairs closely with runway and the SaaS magic number.

Frequently asked questions

What is a good burn multiple?

By Bessemer's scale, under 1 is amazing, 1 to 1.5 is great, 1.5 to 2 is ok, and above 2 is suspect. The lower the number, the less cash you're burning to add each euro of new ARR — and the more efficiently you're growing.

How do you calculate the burn multiple?

Divide net cash burned in a period by the net new ARR added in that same period. Net new ARR is the change in annual recurring revenue, so it already accounts for churn. The result tells you how many euros of cash it took to win one euro of net new recurring revenue.

How is the burn multiple different from CAC payback?

CAC payback measures how long it takes to recoup the cost of acquiring one customer, while the burn multiple captures the whole company's cash efficiency — including product, overhead, and churn, not just acquisition. The burn multiple is the broader, company-wide view; CAC payback zooms in on the unit economics of a single customer.

Runway · SaaS magic number · Rule of 40 · CAC payback period

Learn more

The complete guide to value-based bidding · Value-based bidding without a data team