GTM Glossary · Metrics
Burn Multiple
Total net cash burned divided by net new annual recurring revenue in the same period.
[01]What It Means
Where the Magic Number isolates sales and marketing, the Burn Multiple judges the whole company: product, overhead, and every unplanned cost included. Under 1.0x is exceptional, 1.0x to 2.0x is normal for a scaling business, and above 3.0x calls for structural intervention rather than optimisation.
[02]Why It Matters
It is the cleanest read on whether an organisation converts capital into enterprise value. A stalled market entry shows up here before it shows up in the pipeline report, because the cost arrives first.
[03]Where It Goes Wrong
Excluding one-off costs that are structurally recurring, such as repeated legal setup in each new country.Comparing across companies with different funding models.Cutting the spend that generates next year’s ARR to improve this year’s ratio.
[04]Related Terms