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Burn multiple

How much cash do you burn to add each £/$ of new recurring revenue?

#Finance & Accounting #Business Models #Fundraising

How it works

Burn multiple = cash burned ÷ new yearly recurring revenue added.
David Sacks's guide: under 1 is amazing, 1–2 good, above 3 a warning sign.
Use the same period for both numbers.

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Your result

Burn multiple

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Learn the idea behind it

Unit economics (LTV vs CAC)

Do you earn more from a customer over their lifetime than it costs to get them?

Fundraising basics

Raising money means selling part of your company. Understand the terms before you sign.

References

[1]
Venture Deals — Brad Feld & Jason Mendelson (2011)
Official page Get the book