Burn Multiple
Burn Multiple: Net burn divided by net new ARR. Popularized by David Sacks.
Formula
Burn Multiple = Net burn / Net new ARRComputable definition
The canonical formula in the GASP formula grammar. The MCP server compiles it to SQL over the datasets listed below.
metric.burn_rate / (metric.net_new_mrr * 12)Unit: ratio
Notes: Net burn over net new ARR for the same one-month period. Net new ARR is net new MRR x 12.
Data requirements
Grain: End-of-month snapshot · Frequency: Monthly · Aggregation: snapshot (month) · Staged: no · Main source: Billing.
| Field | Dataset | Type |
|---|---|---|
cash_balance | balance_sheet | decimal |
event_date | revenue_event | date |
event_type | revenue_event | string |
mrr_change | revenue_event | decimal |
snapshot_date | balance_sheet | date |
Example SQL (Postgres)
SELECT (CAST(((CAST(((SELECT COALESCE(SUM(cash_balance), 0) FROM balance_sheet WHERE snapshot_date = :period_start) - (SELECT COALESCE(SUM(cash_balance), 0) FROM balance_sheet WHERE snapshot_date = :period_end)) AS DOUBLE PRECISION) / NULLIF((CAST((:period_end - :period_start + 1) AS DOUBLE PRECISION) / 30.4375), 0))) AS DOUBLE PRECISION) / NULLIF(((((((((SELECT COALESCE(SUM(mrr_change), 0) FROM revenue_event WHERE event_date >= :period_start AND event_date <= :period_end AND event_type = 'new')) + ((SELECT COALESCE(SUM(mrr_change), 0) FROM revenue_event WHERE event_date >= :period_start AND event_date <= :period_end AND event_type = 'expansion'))) + ((SELECT COALESCE(SUM(mrr_change), 0) FROM revenue_event WHERE event_date >= :period_start AND event_date <= :period_end AND event_type = 'reactivation'))) - ((-(SELECT COALESCE(SUM(mrr_change), 0) FROM revenue_event WHERE event_date >= :period_start AND event_date <= :period_end AND event_type = 'churn')))) - ((-(SELECT COALESCE(SUM(mrr_change), 0) FROM revenue_event WHERE event_date >= :period_start AND event_date <= :period_end AND event_type = 'contraction'))))) * 12), 0)) AS burn_multiple From an agent: with the GASP MCP server, call
lookup_metric({ "name": "Burn Multiple" }) or generate_query({ "metric": "Burn Multiple", "adapter": "<your adapter JSON>" }).
Benchmarks
- Below 1x: Excellent (top 10% of Series A companies)
- 1.0-1.5x: Strong (top quartile)
- 1.5-2x: Median, acceptable
- 2.0-3x: Concerning, especially above $20M ARR
- Above 3x: Critical, requires immediate attention
What It Tells You
How much cash is being burned to generate each dollar of new ARR.