Bessemer Efficiency Score
What is Bessemer Efficiency Score?
Bessemer Efficiency Score is a measure of capital efficiency that tracks net new ARR against net burn for a given period. This metric showcases the incremental ARR dollars added for every dollar of burn, effectively measuring a company’s spending habits.Alternate names: BVP Efficiency Score
How to calculate Bessemer Efficiency Score
What is a good Bessemer Efficiency Score benchmark?
According to Bessemer Venture Partners, the best Bessemer Efficiency Score is greater than 1.5x, with “better” companies falling in the range of 0.5-1.5.
A company records $1 million in net new ARR and $600K net burn in a given year, resulting in a Bessemer Efficiency Score of 1.7x. This indicates that the company’s capital efficiency has reached the “best” range of scores.
More about this metric
Bessemer Efficiency Score, also known as BVP Efficiency Score, is a measure of capital efficiency that was devised by Bessemer Venture Partners. Track this metric to have an objective way of looking at your capital efficiency.
While it’s great to generate revenue, it’s important to look at revenue as a return on capital expenditure. Bessemer Efficiency Score enables you to do this by looking at your Net New ARR as a multiple of Net Burn. You can then track this number against the benchmark to determine if you need to improve your capital efficiency.
Additional Bessemer Efficiency Score recommended resourcesRead about the G.R.I.T. framework for SaaS founders.
Metrics related to Bessemer Efficiency Score
Net Annual Recurring Revenue Added
Net Annual Recurring Revenue (ARR) Added is the net change of annual recurring revenue from new logo...
Net Burn, often referred to as Burn Rate, is the amount a company is losing per month as they burn t...
Base Net Burn
Base Net Burn gives a view of your Net Burn excluding customer acquisition costs (CAC)....