Burn Multiple

A capital efficiency metric measuring how many pounds of capital you burn to generate each pound of new ARR. Burn Multiple equals Net Burn divided by Net New ARR.

A low burn multiple means you are converting capital into revenue efficiently. Under 1x is exceptional. Over 2x is a warning sign. In a tight funding market, burn multiple is as important to investors as growth rate.

You burn £500,000 in a quarter and add £200,000 in net new ARR. Burn Multiple equals 2.5x. For every £1 of recurring revenue you add, you spend £2.50. An improvement to 1.2x would dramatically extend runway and improve valuation.