Burn Multiple
How much net burn you spend to generate each dollar of new ARR.
A capital-efficiency ratio showing how much cash you burn for each dollar of net new ARR created in the same period. Unlike CAC, it includes the whole operating system: product, support, G&A, sales, and churn quality.
Formula
Burn Multiple = Net Burn ÷ Net New ARRWorked example
Burn $300,000 in Q1 and add $200,000 of Net New ARR → Burn Multiple = 1.5x.
Benchmark
Capital efficiencyWhy it matters
Burn Multiple is the cleanest founder-level answer to 'are we buying growth efficiently?' A company can have solid LTV:CAC and still have a bad Burn Multiple if churn is high, headcount is too heavy, or expansion is weak. It is especially useful once fundraising gets harder and capital efficiency matters as much as growth.
Common mistakes
- Using gross new ARR instead of net new ARR — ignores churn and contraction.
- Calculating from bookings instead of actual recurring revenue added.
- Reading one month in isolation; use quarterly or trailing periods for stability.
Tracked in FlowMRR
Not tracked — needs your net burn; FlowMRR's Dashboard → MRR Breakdown gives the Net New ARR half.