Burn Multiple
Definition
Net cash consumed in a period divided by net new annualised recurring revenue generated in that period. Burn multiple measures the cash cost of generating each unit of new recurring revenue. A burn multiple below one indicates that the company is generating more new recurring revenue than cash it is consuming. A burn multiple above two at Growth Stage indicates that the growth investment is capital-intensive relative to the new revenue being generated.
Common Misapplication
The most common misapplication is calculating burn multiple using gross burn rather than net burn, which overstates the cash consumed and produces a more negative picture of capital efficiency than the actual position warrants.
FFI Standard Reference
This term is defined and applied in Book 2, Section 2.5: The Cost Structure Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Burn Multiple. https://ffistandard.org/glossary/burn-multiple/. 2026.