Free calculator
Burn multiple calculator
Burn multiple is net burn ÷ net new ARR for the same reporting window—often used as a capital-efficiency check for subscription businesses. Pick month, quarter, or year as a reminder, then type both numbers for that exact span (we do not auto-annualize). Popularized by David Sacks as a simple headline ratio—not an investor promise, not a substitute for your finance model—see methodology.
When this ratio helps
You already have a burn line and an ARR movement for one reporting window and want a headline efficiency check—before you rebuild the full model.
- Board or investor asks for burn multiple on a quarter—type the same-quarter net burn and net new ARR you already reconciled.
- Spreadsheet parity: confirm
=netBurn/netNewARRmatches this page before you extend the workbook. - SaaS planning sanity check: compare this quarter to last quarter by retyping two fresh pairs—not a live benchmark database.
- Teaching and interviews: separate burn multiple from YoY %, CAGR, ROI, or payback—different shapes of question.
Burn multiple compares how much cash the business burned in a period to how much ARR moved in that same period. Lower multiples are often read as more efficient growth in venture SaaS discussions—context always matters.
Core formula
Burn multiple = net burn ÷ net new ARR when net new ARR ≠ 0. Net burn is cash operating out − cash operating in for the window. Net new ARR is new + expansion − churn/contraction in ARR terms for the same window.
What the month / quarter / year tabs do
They are a label and helper copy only—we do not rescale your inputs. If you type annual numbers while Month is selected, the math still runs—you must keep definitions aligned.
What we do not model
Magic number, NRR tables, cohort revenue, EBITDA variants, stock-based comp adjustments, FX, runway months, or live benchmarks—build those in your financial model template when you need them.
Related tools on this site: For two ARR points and YoY %, open the YoY growth calculator. For two cash totals and ROI % (plus optional CAGR), use the ROI calculator. For CAGR between two values and a span, use the CAGR calculator. For time-to-recover an outlay from cash inflows, use the payback period calculator—a different question than burn multiple.
Google Sheets & Excel
English function names. Net new ARR is usually two ARR snapshots; net burn is a single cash line for the same dates—keep currencies and signs consistent.
=Ending_ARR-Beginning_ARRName cells to match your ARR bridge; both readings must be as-of the same close.
=Net_Burn/Net_New_ARRGuard divide-by-zero with IF/IFERROR if net new ARR can be 0.
Frequently asked questions
What is burn multiple?
Burn multiple (often credited to David Sacks) is net burn ÷ net new ARR for the same period. It asks how much cash you spent per dollar of ARR movement in that window—not revenue multiples on valuation.
What is the formula?
Burn multiple = net burn ÷ net new ARR, with both measured over the identical reporting span. If net new ARR is 0, the ratio is undefined—do not force a number.
Can I mix monthly burn with annual ARR?
Not if you want a meaningful headline ratio. Annualize (or de-annualize) in your sheet first, then type matching units here—or keep everything in one native cadence your team already reports.
What is a “good” burn multiple?
Blog and board chatter often cites < ~2× as a rough “venture-stage SaaS” conversation zone when growth is healthy—not a rule, not a target for every company, and not advice from this page. Stage, margin, and strategy dominate.
Can burn multiple be negative?
Yes, when one side is negative or both are, the quotient can flip sign. Example patterns: cash-positive growth (negative net burn) with positive net new ARR yields a negative multiple—interpret with your CFO, not from a headline alone.
Is net burn the same as EBITDA?
Not exactly. EBITDA is an accrual-style earnings line; net burn here is meant as cash from operations vs cash costs for the same window your team already tracks. Align labels with your model.
Should I use ARR or MRR in the denominator?
This page frames net new ARR because the metric is ARR-native in most SaaS finance bridges. If you only track MRR, convert with consistent rules (×12 only when that matches your definitions) before typing a single denominator.
Who introduced burn multiple?
The burn multiple framing is widely associated with David Sacks and Craft Ventures writing in 2020—this site is independent and not affiliated; we provide a calculator for the common ratio definition only.
Is burn multiple the same as YoY growth?
No. YoY % compares one metric at two year-ends. Burn multiple divides cash burn by ARR movement in one span. Use the YoY growth calculator when you only have two headline values for the same metric.
How do I match this in Google Sheets or Excel?
Put net burn and net new ARR in two cells, then =A1/B1 (names yours). Add IFERROR/IF(B1=0,...) so zero denominators do not explode the sheet.
Is this investment, fundraising, or accounting advice?
No. It is a free educational calculator—not a VC memo, not diligence output, and not a substitute for qualified finance and tax help when decisions have money on the line.