Why burn multiple beats LTV/CAC for investors
LTV/CAC is forward-looking and easy to game (long payback assumptions, optimistic churn). Burn multiple is backward-looking and unforgiving — it's just $ burned divided by $ ARR added. Investors love its simplicity; founders should track it monthly.
The 'good' benchmark moved
In 2021's ZIRP era, burn multiples of 3–4 raised capital easily. Post-2022, investors demand <2 for Series A-B and <1 for later stages. Founders not tracking it now find out the hard way at the next raise.
Cutting burn vs. growing ARR
Two paths improve the ratio. Cutting burn is faster (RIFs, vendor consolidation) but caps growth. Growing ARR (better conversion, expansion) is slower but increases enterprise value more. Most boards in 2026 want both.
FAQ
Should I use GAAP or cash burn?
Cash burn (operating cash flow) is the investor standard. GAAP can mask burn through accruals. Use the bank balance change adjusted for financing.
What counts as 'net new ARR'?
New ARR + Expansion ARR − Churned ARR − Contraction ARR. The single number that captures the quarter's net commercial result.
Does this apply to non-SaaS?
Adapt to recurring transactions for marketplaces and consumer subs. For one-time-sale businesses, use net new revenue (TTM) instead of ARR.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.