# Burn Multiple

Date created: Apr 29, 2021  •   Last updated: Feb 17, 2022

## What is Burn Multiple?

Burn Multiple measures how much a startup is burning in order to generate each incremental dollar of ARR. This metric evaluates burn as a multiple of revenue growth. The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. The lower the Burn Multiple, the more efficient the growth is.

### Burn Multiple Formula

ƒ Sum(Net Burn) / Sum(Net New ARR)

### How to calculate Burn Multiple

Q1 just ended and it’s time for a board meeting. The startup reports that it burned \$2M in the quarter while adding \$1M to its ARR. That’s a 2x Burn Multiple — reasonable for an early-stage startup. On the other hand, if the company burned \$5M in Q1 to add \$1M of net new ARR, that’s a terrible Burn Multiple (5x). It should probably cut costs immediately. That company is spending like a later-stage company without delivering later-stage growth.

### Start tracking your Burn Multiple data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data.

### What is a good Burn Multiple benchmark?

For venture-stage startups, these are reasonably good rules of thumb:

### Burn Multiple benchmarks

Burn Multiple

Craft Ventures

Monthly Burn Rate by ARR and Growth Rate

OpenView, 2019

### How to visualize Burn Multiple?

A summary chart is the best way to visualize Burn Multiple. Summary Charts display the current value in comparison with the past. Take a look at the example:

### Burn Multiple visualization example

Burn Multiple

2x

0.75

vs previous period

#### Summary Chart

Here's an example of how to visualize your current Burn Multiple data in comparison to a previous time period or date range.

Burn Multiple

1.74x

0.73

vs previous period

#### Summary Chart

Here's an example of how to visualize your current Burn Multiple data in comparison to a previous time period or date range.