Metrics & Performance
Burn Multiple
Net burn divided by net new ARR — a measure of capital efficiency. A burn multiple below 1.5x is considered healthy for growth-stage SaaS companies.
Burn multiple = Net cash burned / Net new ARR added. It measures how much money a company burns to generate each dollar of new recurring revenue. A burn multiple of 1.0x means you're burning $1 for every $1 of new ARR — breakeven efficiency. Below 1.0x is exceptional. 1.0-1.5x is good. 1.5-2.0x is acceptable for early stage. Above 2.0x raises concerns about capital efficiency. The burn multiple is a more nuanced efficiency metric than gross burn alone because it accounts for the revenue being generated. A company burning $5M/month but generating $10M in new ARR is in a very different position than one burning $5M/month to generate $2M in new ARR. David Sacks popularized the burn multiple as a key Series A/B evaluation metric.