What is a good burn multiple for a SaaS startup?

A burn multiple below 1.5x is efficient, meaning you spend less than $1.50 for every $1 of net new ARR. Below 1x is world-class. Between 1.5x and 2.5x is acceptable for growth-stage companies. Above 4x is a red flag that requires immediate attention to cost structure or growth efficiency.

How much runway should a startup have?

Aim for 12–18 months of runway after any fundraise. Start your next fundraise at 9–12 months of runway remaining. Below 6 months, you should be cutting costs to extend runway while actively raising. Running out of cash is the #1 startup killer.

What is a good revenue per employee for SaaS?

Early-stage SaaS companies typically see $100K–$200K revenue per employee. Growth-stage should reach $200K–$400K. Mature SaaS companies target $300K–$500K+. If this metric is declining as you grow, you're hiring faster than you're growing revenue.

Startup metrics

Operational metrics

Track burn rate, runway, burn multiple, and operational efficiency to ensure your startup scales sustainably without running out of cash.

Operational metrics tell you whether your startup can survive long enough to win. Great product metrics and strong growth mean nothing if you run out of cash or scale your team faster than your revenue.

Burn rate and runway

These are survival metrics. Every founder should know their burn rate and runway off the top of their head.

Gross burn rate

Total monthly expenses

Net burn rate

Monthly expenses − Monthly revenue

Runway

Cash in bank ÷ Monthly net burn rate

Example

Monthly expenses: $100K
Monthly revenue: $30K
Cash in bank: $500K

Net burn = $100K − $30K = $70K/month Runway = $500K ÷ $70K = ~7 months

Rule of thumb: start fundraising when you have 9–12 months of runway. Start panicking (and cutting) when you have 6 months or less.

Burn multiple

Burn multiple is the best single metric for evaluating whether your growth is efficient. It answers: how many dollars are you burning for each dollar of net new ARR?

Burn multiple

Net cash burned ÷ Net new ARR (same period)

Example

Net cash burned this quarter: $300K
Net new ARR added: $100K

Burn multiple = $300K ÷ $100K = 3x

Burn multiple

> 4x Unsustainable

2.5 – 4x Concerning

1.5 – 2.5x Acceptable

1 – 1.5x Efficient

< 1x World-class

A burn multiple above 2x means you’re spending more than $2 for every $1 of new ARR. That’s defensible in early stages when you’re investing in product, but past $1M ARR it needs to come down. If it’s above 4x, cut costs or find more efficient growth channels before raising more money.

Revenue per employee

Annual revenue ÷ Number of employees

This is the simplest measure of organizational efficiency. It reveals whether you’re building a lean machine or an overstaffed bureaucracy.

Revenue per employee (B2B SaaS)

$100K – $200K Early-stage

$200K – $400K Growth-stage

$300K – $500K Mature

If your revenue per employee is declining as you grow, you’re scaling the team faster than revenue — a common trap. Every hire should have a clear connection to revenue growth or customer retention.

Capital efficiency

Revenue per dollar raised

Current ARR ÷ Total capital raised

Efficient companies generate $0.50–$1.00+ of ARR per dollar raised. Capital-inefficient companies might be below $0.25. In the current funding environment, capital efficiency is more important than ever.

Cash flow timing

Metric	What it tells you
Days sales outstanding (DSO)	How fast you collect payment
Deferred revenue	Prepaid subscriptions — a cash flow advantage
Cash conversion cycle	Time from acquisition spend to cash collection

Annual upfront billing is one of the best operational moves a SaaS company can make. It improves runway, reduces churn (commitment effect), and funds growth without dilution.

System and team metrics

These are secondary operational metrics — important for the relevant team leads, but not for your weekly all-hands.

System reliability:

Uptime (target 99.9%+)
Response time (p95 under 500ms)
Error rates
Deployment frequency

Support efficiency:

Tickets per customer per month
First response time
First contact resolution rate
CSAT score

Hiring:

Time to hire
Cost per hire
90-day retention of new hires

Common operational mistakes

Hiring ahead of revenue. The most common cause of high burn multiples. Hire for the growth you have, not the growth you hope for.

Ignoring gross margins. A SaaS company with 60% gross margins has fundamentally different unit economics than one with 85%. Infrastructure costs, third-party APIs, and support costs all matter.

No cash flow forecasting. Build a 13-week cash flow forecast and update it weekly. Surprises in cash flow kill more startups than bad products.

Manual processes that don’t scale. What works with 10 customers breaks at 100. Automate early — especially billing, onboarding, and reporting.

Try this in Basedash

Create a dashboard showing monthly burn rate, runway, burn multiple, and revenue per employee over the past 12 months

Connect your financial data and HR systems to track operational health automatically.

Get started free →

Frequently asked questions

What is a good burn multiple for a SaaS startup?: A burn multiple below 1.5x is efficient, meaning you spend less than $1.50 for every $1 of net new ARR. Below 1x is world-class. Between 1.5x and 2.5x is acceptable for growth-stage companies. Above 4x is a red flag that requires immediate attention to cost structure or growth efficiency.
How much runway should a startup have?: Aim for 12–18 months of runway after any fundraise. Start your next fundraise at 9–12 months of runway remaining. Below 6 months, you should be cutting costs to extend runway while actively raising. Running out of cash is the #1 startup killer.
What is a good revenue per employee for SaaS?: Early-stage SaaS companies typically see $100K–$200K revenue per employee. Growth-stage should reach $200K–$400K. Mature SaaS companies target $300K–$500K+. If this metric is declining as you grow, you're hiring faster than you're growing revenue.