Investor question 25 of 50 · Costs, burn & runway
“What's your burn multiple?”
Short answer: the investor is really asking is your growth capital-efficient? Answer in three steps: (1) net burn / net new ARR over the same period; (2) compare: under 2x is commonly seen as efficient; (3) show the plan to improve it.
What they're really asking
Is your growth capital-efficient? Investors rarely care about the question on its own. They're testing whether you know your numbers cold, whether your assumptions are honest, and whether you can explain them simply.
How to answer, step by step
- Net burn / net new ARR over the same period.
- Compare: under 2x is commonly seen as efficient.
- Show the plan to improve it.
An example answer
About 2.1x over the last 12 months. The plan brings it under 1x in year 2 as revenue scales faster than the team.
Figures are from Loopdesk, the fictional SaaS company in our sample files. Swap in your own numbers and keep the structure.
The answer that loses trust
Avoid
Not knowing what burn multiple is.
Where the proof lives
Before the meeting, find the number behind your answer. In our workbooks it lives in: Efficiency Metrics, Annual Summary. If you can open that tab and point to it, the follow-up question is easy.