Board Pack Burn Multiple Calculator
Burn Multiple = Net Burn / Net New ARR. It's the single metric VC boards use to evaluate capital efficiency. Below 1 = elite. 1-2 = great. 2-3 = OK. 3+ = needs improvement. Calculate and benchmark.
| Net Burn | — |
| Net New ARR | — |
| Burn Multiple | — |
| Performance Tier | — |
What Is Burn Multiple
Burn Multiple = Net Burn / Net New ARR. Introduced by David Sacks (Craft Ventures) in 2020 as a single-number capital efficiency metric. Replaced LTV/CAC in many board decks because it's simpler and harder to fudge.
Below 1x = elite. 1-1.5x = great. 1.5-2x = good. 2-3x = suspect. 3+ = bad. Public SaaS company median is around 1.5x; top quartile is below 1x.
Source: David Sacks / Craft Ventures + Bessemer Cloud Index
Why It Replaced Other Metrics
Burn multiple captures both growth efficiency AND capital efficiency in one number. LTV/CAC is easy to manipulate (allocate marketing salaries to other cost lines). Magic Number is sales-and-marketing-specific. Burn multiple is total.
It's also forward-looking: if your burn multiple is 5x and runway is 12 months, you need to fix it now. If your burn multiple is 1x, you can keep burning indefinitely (assuming you can keep raising).
How to Improve Burn Multiple
Two levers: reduce burn (cut costs) or grow net new ARR (more sales). Most companies focus on burn cuts first because they're faster. Cut 20% of burn → improve burn multiple 20%.
Sales acceleration is harder but compounds. Move payback period under 12 months (faster customer ramp), improve trial conversion 20%, increase ACV via pricing. All lift net new ARR without proportional burn increase.
Watch the Inputs
Net burn: cash outflow minus cash inflow. Includes salaries, marketing, software, office, all spend. Net new ARR: new customer ARR + expansion ARR − churn ARR. Both must be measured consistently.
Some founders inflate net new ARR by counting bookings (signed deals not yet billed) — wrong, should be billed ARR. Or by excluding gross churn from the calculation — wrong, churn must be netted. Boards will catch these tricks.