Fig. 01 · Glossary
Burn Multiple
Also known as Net Burn Multiple, Cash Efficiency
Definition
Burn multiple equals net cash burn divided by net new ARR over the same period. A company burning $2M to add $1M of net new ARR has a 2.0x burn multiple. Lower is generally better, but interpretation depends on stage, gross margin, retention, and market timing.
Burn multiple is useful because it forces growth and cash into the same sentence. A company can have strong ARR growth and still destroy value if the cost to acquire that growth is structurally too high.
For turnaround work, the first question is whether burn is funding repeatable growth, temporary recovery, or operating leakage. The answer determines whether the company needs capital, cost reduction, pricing work, or a rebuilt go-to-market model.
Human Renaissance glossary · operator-grade definitions · Research methodology
