What is a SaaS Burn Multiple and why does it matter?

Burn Multiple is Net Burn divided by Net New ARR. It measures how much capital your company burns to generate each dollar of annual recurring revenue. A Burn Multiple under 1.0x is considered excellent, 1.0x to 1.5x is good, while above 2.0x indicates poor capital efficiency.

How do you calculate monthly burn percentage?

Monthly burn percentage is calculated by dividing your monthly net burn by your starting cash balance. For example, burning $20,000 per month with $200,000 cash in bank represents a 10% monthly burn rate.

Capital Velocity & Efficiency Metric

Burn Rate Calculator

Measure your monthly cash burn velocity. Compare gross burn against net burn, calculate annualized loss rates, and benchmark your venture Burn Multiple.

Burn Rate & Efficiency Inputs

Current Cash Balance ($)

Gross Monthly Expenses ($)

Monthly Revenue ($)

Annual Net New ARR ($) — Optional for Burn Multiple

Used by top venture funds (Bessemer/Craft) to benchmark capital efficiency ($Net Burn ÷ Net New ARR$).

Net Monthly Burn$30,000Cash drained per month

Gross Monthly Burn$45,000Total monthly expenses

Cash Burn Velocity12% cash / month

Implied Runway8.3 months

Annualized Net Burn$360,000/yr

SaaS Burn Multiple: 2x

You spend $2 to generate $1.00 of new ARR.

Rating: Fair

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Burn Rate Frequently Asked Questions

Everything you need to know about cash runway, burn rates, and financial planning.

Gross Burn is the total absolute amount of cash spent by the business each month (payroll, rent, vendors). Net Burn is Gross Burn minus total monthly cash revenue. If you spend $50,000 and earn $20,000, your Gross Burn is $50,000 and Net Burn is $30,000.