Free tool
Burn rate and burn multiple calculator
Gross burn is what you spend in a month. Net burn is spend minus revenue. Average the last three months to smooth out annual payments. The burn multiple divides net burn over a period by the net new ARR added in it: under 1 is amazing, 1 to 1.5 great, 1.5 to 2 good, 2 to 3 suspect, and over 3 bad.
The last three months
New plus expansion, minus churned annual recurring revenue. Leave empty if you have none.
Net burn a month
$98,000
Average of the three months
- Gross burn a month
- $138,000
- Net burn over the three months
- $294,000
- Burn multiple
- 1.63×
Good: you burn $1.63 for each $1 of new ARR.
How it's calculated
- Gross burn is the average monthly spend across the months you enter; net burn subtracts each month's revenue.
- Use cash collected, not invoices sent, and leave out money raised or borrowed.
- The burn multiple is net burn over the months entered divided by the net new annual recurring revenue added in those months.
- The bands are David Sacks': under 1 amazing, 1 to 1.5 great, 1.5 to 2 good, 2 to 3 suspect, over 3 bad.
Questions founders ask
What is a good burn multiple?
Under 1.5 is great by David Sacks' bands, and 2 is reasonable for an early-stage startup. Seed companies often start near 3 and improve as sales grow.
What is the difference between gross and net burn?
Gross burn is everything you spend in a month. Net burn is what you spend minus what customers pay you, so it is the number that shrinks your cash.
Why average three months?
One month can swing with an annual software payment, a bonus or a large customer prepayment. A three-month average is what most investors ask for.
What if I have no recurring revenue yet?
Then the burn multiple doesn't apply. Watch net burn and runway instead.
Rules from, checked September 30, 2026: