burn multiple
also referred to as: burn multiples
9 statements across 5 episodes · 5 bullish · 2 bearish · 4 people on the record · first statement Jun 29, 2022 by Christoph Janz · across every show →
Everything said about burn multiple, oldest first
Jun 29, 2022 positive
Janz: Good burn multiple for $1M-$25M ARR SaaS is 1.5 to 2
“As a general rule of thumb, for SaaS companies, around a million to twenty-five million in an ARR, which I'm assuming is probably the like, the range most people in the audience here are in one to five 1.5 to two is, is good. One to 1.5 or even lower is, is gr…”
Oct 13, 2022 neutral
The median a16z portfolio burn multiple for $0-10M ARR is 1.6
“Here this data set comes from Andreessen Horowitz, and you can see the typical numbers that they can see here in their portfolio for different revenue bands, and as you can see, the median for them in the zero to ten million ARR range is 1.6”
Oct 13, 2022 positive
Capital-efficient founders retain double the equity scaling to $100M ARR
“If there are two companies growing from zero to about a hundred million in ARR, one of them has a burn multiple of four. The other one has a burn multiple initially starting at about three and then decreasing to about .75. Then just because you have to raise s…”
Oct 13, 2022 positive
A SaaS burn multiple under 1.5 is good for sub-$25M ARR
“As a rule of thumb, for earlier stage companies below twenty-five million ARR it's probably not, not fair to still call them earlier, like, let's say early and mid-stage company at less than twenty-five million ARR one to 1.5 is generally considered to be good…”
Nov 3, 2022 positive
Shen: Startups Over $5M–$10M ARR Should Prioritize CAC Payback Over Burn Multiples
“My big recommendation is for later stage companies, particularly if you're five, if not ten million AR and higher, to definitely start measuring your business by a CAC payback, because it's a true measure of new revenue that you're generating from your sales a…”
Sep 13, 2023 negative
David Sacks: Startups must cap their Burn Multiple at 2.0 during downturns
“Do not let your burn multiple go above two, because We're going into a tough period. It's more likely that you're gonna miss than exceed, and if you miss, your burn multiple's gonna, like, go off the charts. It's gonna be even worse than you're planning, right…”
Sep 13, 2023
David Sacks: Burn Multiple should trend from 2.0 to zero at IPO
“Your burn multiple, which is just your burn divided by your net new ARR, it should be going down. And obviously, by the time... That's the point, it should be going down, and so, like, if you're a late stage company, you're like a growth stage company, like, y…”
Sep 13, 2023 negative
David Sacks: CAC Payback and Magic Number are flawed and easily miscalculated
“What I was seeing in metrics like CAC, is that if the finance team simply misattributed a certain expense, then, like, it would make the CAC Payback look great... Magic number is even the worst version of this. Like, no one knows how to calculate. It was const…”