Definition
Burn Multiple is a metric that assesses how efficiently a company converts its cash burn into revenue. It�s calculated by dividing net cash burned by net new revenue generated in a specific period.
Related Services
Primarily used in venture capital evaluations, startup performance monitoring, and growth-stage company analyses.
Problem and Application
A high burn multiple indicates inefficiencies in generating revenue relative to cash usage, posing risks for sustainability. For startups, understanding this metric helps allocate resources effectively, secure funding, and extend operational runway.
Conclusion
Burn multiple is a critical metric for assessing the financial health of startups, providing investors and management with insights into resource efficiency and growth potential.
