SaaS Burn Multiple & Capital Efficiency Calculator

How it works

Burn multiple = net burn ÷ net new ARR; efficiency score = net new ARR ÷ net burn; runway = cash ÷ monthly burn; burn multiple required = cash ÷ (target ARR − current ARR)

Burn multiple asks the simplest capital-efficiency question a subscription business can face: how many dollars did we burn to add a dollar of recurring revenue? A multiple under one means the company added more ARR than it consumed in cash — it is effectively funding growth from its own economics — while anything above three means growth is being bought at a price investors will not keep paying. Unlike CAC payback it captures everything: sales, product, G&A and churn all show up in either the numerator or the denominator, and it tightens as a company scales. Reading it against runway turns it into a plan: with a fixed cash pile and a target ARR for the next raise, the required burn multiple is simply cash divided by the ARR gap, and a company whose actual multiple is worse than that will run out of money short of the milestone.

Worked example

Growing ARR from $4.0 M to $5.8 M (+$1.8 M, 45%) while burning $2.7 M is a burn multiple of 1.5× — on the border of great and good — and an efficiency score of 0.67. With $6.5 M in the bank and $225 k of monthly burn there are 29 months of runway; reaching $10 M ARR on that cash requires a multiple of at most 1.55×, so today’s efficiency just makes it.

Frequently asked questions