Burn multiple is a capital-efficiency metric calculated as net burn divided by net new ARR, measuring cash burned per dollar of new ARR. The denominator can also be net new revenue. The metric was popularized by David Sacks in 2020 and became a dominant SaaS efficiency metric during the 2022-2024 capital-tightening period when investors began scrutinizing capital efficiency far more rigorously than during the 2020-2021 growth-at-all-costs era. It is the SaaS metric that captures the spirit of "capital efficiency matters now."
The calculation:
Burn Multiple = Net Burn / Net New ARR