Burn Multiple

Burn multiple is a capital-efficiency metric popularized by David Sacks: net cash burn divided by net new ARR over the same period. If you burned $2M in a quarter and added $1M of net new ARR, your burn multiple is 2 — you spent two dollars to generate each dollar of new recurring revenue. Lower is better. It answers the question investors and disciplined founders actually care about: how much cash are you consuming to grow? Unlike growth rate alone, it can't be flattered by spending recklessly, because the spending is the denominator's context. Rough benchmarks: under 1 is excellent, 1–1.5 is good, above 2 signals inefficient growth that gets punished in tight funding markets. For bootstrappers, the same discipline applies even without VC — a high burn multiple means you're buying growth you can't sustain. Track it quarterly alongside net revenue retention to see whether efficiency is improving or decaying as you scale.