Burn multiple calculator. The Sacks framework.
Enter net burn and net new ARR (both quarterly). Get burn multiple plus the David Sacks verdict tier (amazing under 1, great 1-1.5, good 1.5-2, ok 2-3, suspect over 3).
Net cash out, net new ARR.
Multiple + tier.
The cost of a dollar of growth.
Burn multiple is net cash burn divided by net new ARR over the same period. The metric reads as "how many dollars of cash do we burn to add one dollar of net new ARR?" A 1.5 burn multiple means $1.50 of burn per $1 of growth. David Sacks of Craft Ventures popularized this in 2020 as the single-number test for capital efficiency. The calculator above shows your multiple plus the Sacks tier (amazing under 1, great 1-1.5, good 1.5-2, OK 2-3, suspect over 3) and the implied runway from the cash-on-hand sanity check.
Three principles for capital-efficient SaaS. One, measure burn multiple alongside Quick Ratio — burn multiple shows cost of growth, Quick Ratio shows quality of growth. Both should improve quarter-over-quarter. Two, fix the denominator before the numerator — cost cutting (numerator down) caps growth and looks defensive. Accelerating net new ARR (denominator up) compounds. Three, monitor TTM burn multiple, not single-quarter — one large enterprise close can flip a quarter from suspect to amazing without any underlying business change.
Tools in the same cluster: Runway Calculator for the cash-out projection. SaaS Quick Ratio for the bookings-efficiency view. SaaS Magic Number for the sales-efficiency view.
Six answers.
What is the burn multiple?
Burn multiple equals net cash burn divided by net new ARR over the same period. Net burn is monthly cash out minus cash in (excluding investment proceeds). Net new ARR is gross new ARR plus expansion ARR minus churned ARR minus contraction ARR. The metric was named by David Sacks of Craft Ventures in 2020 as a single-number test of capital efficiency that captures both growth speed and burn rate. Lower is better.
What burn multiple tier am I in?
David Sacks' published tiers: under 1 = amazing (rare; world-class capital efficiency). 1 to 1.5 = great (top decile). 1.5 to 2 = good (the median venture-backed SaaS at Series A-B). 2 to 3 = OK (acceptable but watch the trajectory). Over 3 = suspect (board-level concern; either growth needs to accelerate or burn needs to compress). Burn multiple is most informative for SaaS in the $1M-$50M ARR band; below $1M ARR the denominator is too small for the ratio to be reliable.
Why use burn multiple instead of just runway?
Runway answers 'how many months until cash runs out at current burn rate?' but ignores growth. A 24-month-runway company burning $500K/month with $0 new ARR is much weaker than a 12-month-runway company burning $500K/month with $1.2M new ARR — the second has 0.42 burn multiple (amazing). Burn multiple captures both axes in a single number: speed of growth and cost of growth. It also normalizes across stages, so a Series A and a Series C company can be compared on the same metric.
What lifts the burn multiple (makes it worse)?
Three things deteriorate burn multiple. One, hiring ahead of revenue (expensive engineering or sales hires that don't translate to ARR within 4-6 months). Two, expanded paid acquisition without payback discipline (CAC payback over 18 months). Three, churn acceleration (one large enterprise contraction can flip a quarter from great to suspect). The fix is rarely cost-cutting alone; the durable fix is denominator-side — accelerate net new ARR via expansion motion and churn-reduction work.
Quarterly or trailing 12-month?
Most SaaS boards report quarterly burn multiple plus a trailing-12-month (TTM) burn multiple together. Quarterly burn multiple is noisy — a single large contract can flip the number — so the TTM smooths it for trend reading. The calculator above is built for either; just match the period (both inputs as quarter, or both as TTM). Mixing periods produces a meaningless number.
Does this tool save my data?
No. Every value lives in this browser tab only. Nothing is sent to any server. Closing the tab clears the data. The Copy Results button puts a plain-text summary on your clipboard.
Burn multiple north of 2?
Our SaaS development engagements ship usage-based pricing, expansion mechanics, and the customer-success motion that compresses the burn multiple denominator-side without freezing growth.
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