Burn Multiple Calculator
Calculate Burn Multiple, net burn / net new ARR. Bessemer's efficiency benchmark for SaaS. <1 = exceptional, 1-2 = good, 3+ = concerning.
About this tool
Burn Multiple measures capital efficiency. <1x burns less than $1 to add $1 of ARR. >3x is concerning even at hypergrowth.
Frequently asked questions
What is the Burn Multiple? +
Burn Multiple = net cash burn ÷ net new ARR added in the same period. Popularised by Bessemer Venture Partners, it measures capital efficiency. Under 1x means you're adding more annualised revenue than you're burning cash; above 3x is concerning even at hypergrowth.
How is Burn Multiple different from Magic Number? +
Magic Number measures S&M efficiency only. Burn Multiple includes ALL cash outflows, engineering, product, G&A, S&M, and measures the company's overall capital efficiency. A company can have a great Magic Number but a bad Burn Multiple if R&D and ops are bloated.
What's a healthy Burn Multiple benchmark? +
Bessemer's framework: <1x = amazing, 1-1.5x = great, 1.5-2x = good, 2-3x = watching, 3x+ = concerning. Early-stage startups (pre-Series B) usually run 2-4x because revenue is small relative to the necessary investment in product and team.
Can Burn Multiple be negative? +
Yes, when you're cash-flow positive AND adding ARR. A negative Burn Multiple means you're growing AND not burning cash. Achievable for product-led growth companies past the early stages but rare to maintain through hypergrowth.
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