# 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.

## 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.

## Related terms

- [SAFE](https://prompthausapp.com/learn/safe.md)
- [Valuation Cap](https://prompthausapp.com/learn/valuation-cap.md)
- [Dilution](https://prompthausapp.com/learn/dilution.md)
- [Pro Rata](https://prompthausapp.com/learn/pro-rata.md)
- [Limited Partner](https://prompthausapp.com/learn/limited-partner.md)

## How is this different from Googling it?

Google gives a definition. Prompthaus pairs each term with how it shows up in standups, PRs, prompts, and design reviews. Then it quizzes you until the word sticks. One term a day on iPhone.

- Category: Venture
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