Why is Burn Multiple better than gross burn rate?

Gross burn only tells you how much money you spend. Burn Multiple connects what you spent to what you accomplished (net new ARR), revealing whether high spending actually generates enterprise value.

Updated: August 2026 • Verified v1.2

B2B SaaS Burn Multiple Capital Efficiency Calculator

Finance & MathPopular

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Burn_Multiple = Net_Burn / Net_New_ARR; Monthly_Burn = Net_Burn / Period_Months; Runway = Cash / Monthly_Burn

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Understanding Your Results

Calculates the Burn Multiple ratio, average monthly burn rate, remaining cash runway in months, and classifies efficiency using David Sacks' Craft Ventures scale (<1.0x Amazing, 1.0-1.5x Good, 1.5-2.0x Suspect, >2.0x Dangerous).

Practical Guidance & Next Steps

Burn Multiple evaluates how much cash you burn to generate $1 of new ARR. Unlike traditional burn rate, it directly measures growth efficiency independent of company scale.

What is this?

A venture finance utility that measures how efficiently a subscription software startup consumes cash to generate net new Annual Recurring Revenue (ARR).

How does it work?

1. Enter net cash burned and net new ARR added over the evaluation period. 2. Enter current cash in bank. 3. View Burn Multiple multiple, efficiency grade, monthly burn rate, and runway in months.

Why use it?

Diagnoses whether your startup is burning capital productively or wasting runway before pitching venture investors.

Technical Scope & Calculation Limitations

Calculates standard Craft Ventures / David Sacks SaaS venture efficiency formulas.

Frequently Asked Questions

According to David Sacks (Craft Ventures): Under 1.0x is 'Amazing' (venture top-tier). 1.0x to 1.5x is 'Good'. 1.5x to 2.0x is 'Suspect'. Anything over 2.0x is 'Dangerous / Leaky' and requires immediate cost discipline.

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