Your Burn Multiple, Not Your Burn Rate

Burn rate tells you how fast money leaves. It says nothing about whether the spending is working. The burn multiple, net burn divided by net new annual recurring revenue over the same period, tells you how many dollars you consume to add a dollar of recurring revenue.

Reading the Number

Lower is better. A multiple under one is exceptional and rare. Between one and two is strong. Two to three is workable at an early stage and expected to improve. Above three, the honest reading is that growth is being purchased rather than earned, and the number needs a story attached: a deliberate land-grab, a long enterprise sales cycle just now converting, a one-time infrastructure build.

Why It Is the Better Internal Metric

• It is directional. You can act on it: improve retention, fix pricing, shorten payback, cut spending that is not converting.
• It is hard to flatter. Cutting spend without growth moves it, but so does growing without spending, and only one of those reads well next to your other metrics.
• It travels. Investors, boards and lenders all interpret it the same way.

Its Companions

Read it alongside months of runway, net revenue retention, and CAC payback period. Burn multiple tells you the efficiency of growth, runway tells you how long you have to improve it, retention tells you whether the revenue you bought stays.

What to Do

1. Calculate it for the last four quarters and look at the trend, not the level.
2. Put it on the monthly management pack with a written definition.
3. If it is worsening, identify which spend category is driving it before cutting broadly.

General information for Canadian founders, current to 2026. It is not tax advice and does not account for your specific facts. Rates, thresholds and rules change, confirm the current figures before acting.