Free founder tool
Burn multiple calculator
Calculate net cash burn divided by net new ARR for the same period. See your burn multiple and plain descriptive bands, free with no account or login.
| Measure | Result |
|---|---|
| Burn multiple | 1.50x |
| Interpretation | 1x to below 2x: burn is one to two times new ARR |
Bands describe the arithmetic, not a rating or an industry benchmark. Compare consistent periods and consider growth stage, margins and collection timing. The multiple is rounded to two decimals; bands use the unrounded value.
These figures come from the numbers you enter. Vanward does not check or validate them, and this is not financial, legal or tax advice. Benchmarks vary by company stage and market.
How the math works
Burn multiple = net cash burn / net new ARR. Use cash spent minus cash received from operations for burn, excluding financing flows. Use ending ARR minus starting ARR for net new ARR. Both inputs must cover the same period and use the same currency.
For example, $300,000 net burn during a quarter and $200,000 net new ARR during that quarter gives 1.50x. The company spent $1.50 of net cash for each $1 of new ARR. The result falls in the 1x to below 2x band.
The plain bands describe the size of the ratio. They do not establish business quality or fundraising readiness. A low multiple can reflect collection timing; consider growth stage, margins and consistent periods.
Questions founders ask
- How is burn multiple calculated?
- Divide net cash burn during a period by net new annual recurring revenue added during that same period. Net new ARR is ending ARR minus starting ARR, including expansion, contraction and churn. Use ARR, not monthly recurring revenue.
- What do the bands mean?
- Below 1x means less burn than new ARR. From 1x to below 2x means burn is one to two times new ARR; from 2x to below 3x means two to three times. At 3x or more, burn is at least three times new ARR. These are arithmetic descriptions, not ratings or industry benchmarks.
- What if net new ARR is zero or negative?
- The calculator reports that the multiple is not meaningful without positive net new ARR. Dividing by zero is undefined, and negative growth would produce a misleading efficiency multiple.
- What if the company generates cash?
- With positive net new ARR and negative net burn, the result says cash generating during this period instead of assigning a negative efficiency band. Zero burn and positive net new ARR produces 0.00x.
- Which period should I use?
- Use the same period for net cash burn and the change in ARR, such as a quarter or a year. Exclude financing proceeds from operating cash received. Collection timing and seasonality can make short periods volatile.