How many dollars do you burn to grow a dollar?

The burn multiple, popularised by investor David Sacks, divides the net cash a company burned in a period by the net new ARR it added in the same period. It answers a blunt question: how many dollars did you spend to generate each dollar of new recurring revenue? A burn multiple of 1 means you burned a dollar for every dollar of new ARR; a lower number is more efficient. It captures the whole business's cash efficiency, not just sales and marketing, which is what makes it a favourite gut-check.

Lower is better, and interpretation depends on stage and market conditions, so there's no single pass mark. As a rough frame, a burn multiple under 1 is often seen as very efficient, while a high multiple signals that growth is costing a lot of cash and may not be sustainable if funding tightens. The most useful practice is to track your own burn multiple over time — a rising multiple means each new dollar of ARR is getting more expensive to win, which is worth catching early.

A ready-to-use spreadsheet (Excel & Google Sheets): burn multiple by period from net burn and net new ARR, with the efficiency trend — delivered instantly after checkout. AI-assisted, human-built; not financial advice.