What is Burn Multiple?
Net cash burned divided by net new ARR in the same period. Lower is better, because it shows how many dollars a startup spends to add each dollar of recurring revenue.
$3M burned ÷ $2M new ARR = 1.5x
Burn multiple divides…
Write it in your own words in the app.
In real work
The note-taking startup burned $3 million to add $2 million of net new ARR last year, so Chidi wrote down a burn multiple of 1.5.
In the illustration
Three $1M scoops of fuel go into the firebox and burn away. On the steam side the ARR meter rolls up by $2M of net new annual recurring revenue, and the burn dial swings to 1.5x.
In your deal notebook, calculate the burn multiple for each of the last four quarters from the cash and ARR figures below. Show the arithmetic and point to the quarter where it changed most.
Try it now
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03Career
Find the work that uses it
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