Metrics
The burn multiple is the only number that survives a down round
Growth rate gets you the meeting. Capital efficiency gets you the term sheet — and it is the one metric founders systematically fail to compute honestly.
There is a number every growth-stage investor computes before the second meeting, and most founders arrive without having computed it themselves. It is net burn divided by net new ARR: the burn multiple. It answers one question — how many dollars did you consume to manufacture a dollar of recurring revenue?
Below 1.0 is exceptional. Between 1.0 and 1.5 is strong. Between 1.5 and 2.0 is fine at early stage and worrying at Series B. Above 3.0, the conversation stops being about growth and starts being about control.
The reason founders get it wrong is rarely dishonesty. It is that both halves of the fraction are easy to compute generously. Net burn gets quoted excluding a one-off, or on a good month rather than a trailing average. Net new ARR gets quoted gross, ignoring churn and contraction, which is the single most common error and often moves the multiple by half a turn.
Compute it the way the person across the table will: trailing twelve months, net burn including every cash cost, net new ARR after churn and contraction. Then compute it again quarterly, because a company improving from 2.4 to 1.6 over four quarters tells a completely different story from one sitting flat at 2.0, and the trend is what actually gets discussed.
The deeper reason to track it internally is that it is the cleanest single test of whether your growth is bought or earned. Revenue growth can be purchased with sales headcount and discounting almost indefinitely, right up until it cannot. The burn multiple prices that purchase in real time.
It is also the metric most responsive to decisions you already control. Extending payback by tightening discounting, killing a channel that never converted, delaying two hires by a quarter — each moves the multiple within a quarter or two, which is faster than almost anything else on the dashboard.
None of which means optimising it to the exclusion of everything else. A company with a burn multiple of 0.6 and 20% annual growth is efficient and going nowhere. The point is to know the number, know its trend, and be able to defend both without a spreadsheet open.
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