Free tool
Burn multiple calculator, with benchmarks by stage
Burn multiple is the cash you burned in a period divided by the annual recurring revenue (ARR) you added in it. A startup that burned $1,000,000 in a year while ARR grew from $1,000,000 to $1,800,000 has a burn multiple of 1.25: it spent $1.25 for each new $1 of ARR. David Sacks rates under 1 amazing, 1 to 1.5 great, 1.5 to 2 good, 2 to 3 suspect and over 3 bad.
One period: a quarter or a year
Spend minus revenue, in cash. Leave out money raised or borrowed.
After churn and downgrades
Burn multiple
1.25×
Great: you spent $1.25 for each new $1 of ARR.
- Net new ARR
- $800,000
- Scale's lifetime average
- 1.6×
| Burn multiple | Rating |
|---|---|
| Under 1 | Amazing |
| 1 to 1.5 | Great |
| 1.5 to 2 | Good |
| 2 to 3 | Suspect |
| Over 3 | Bad |
| ARR | Burn multiple | Which figure |
|---|---|---|
| $0 to $1M ARR | 3.4× | Average |
| $2.5M to $5M ARR | 1.8× | Top-quartile growers |
| $25M to $50M ARR | 1.4× | Average |
| Seed to IPO | 1.6× | Lifetime average |
- Burn multiple
- 1.25×
- By David Sacks' bands
- Great
- Scale's average under $1M of ARR
- 3.4×
How it's calculated
- Net burn is spend minus revenue over the period, in cash. Leave out money raised or borrowed.
- Net new ARR is ARR at the end of the period minus ARR at the start, so churn and downgrades already count against it.
- Burn multiple = net burn ÷ net new ARR. Use the same period for both, a quarter or a year.
- The rating uses David Sacks' bands from 2020. The benchmark uses Scale Venture Partners' 2022 averages for the ARR you end the period at, where Scale published one.
Questions founders ask
What is a good burn multiple?
Under 1.5 is great by David Sacks' bands, and under 2 is good. Scale Venture Partners found companies under $1M of ARR averaged 3.4, so early companies usually start high and improve as they grow.
What if ARR went down?
Then the burn multiple has no meaning: you burned cash and added no net ARR. Work on churn and new sales before using the metric.
Should I use a quarter or a year?
Either, as long as burn and ARR cover the same months. A year smooths out a lumpy quarter; a quarter shows recent change faster.
How is this different from the burn rate?
Burn rate is how much cash you lose a month. The burn multiple asks what that cash bought in new recurring revenue. The burn rate calculator works out both from monthly numbers.
Rules from, checked September 30, 2026: