BM
Burn Multiple
The ratio shows a company’s burn rate in comparison with how it is adding new annual recurring revenue (ARR). It’s a concept that is particularly applicable to SaaS companies, because they offer subscription services. But it’s also a valid formula for any business with high growth potential. [1]
The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. The lower, the more efficient the growth is. Burn Multiple under 1x=amazing. 1-1.5=Great. 1.5-2x=Good, 2-3x=suspect, Over 3x=bad.
Primary
[1] NoBlue. Retrieved May 21, 2021, from https://noblue.co.uk/news-updates/netsuite/burn-multiple-metric-capital-efficiency-technology-startups/