---
title: "The Change in Burn Multiple for Startups in 2023"
description: "Discover how startup burn multiples are shifting in 2023, with efficient companies increasing spend 14-40% while others cut by 70%. Key metrics for SaaS founders."
categories: ["data analysis","financials","startups"]
keywords: ["Theory Ventures","startup burn multiple","venture capital","capital efficiency","SaaS financial metrics","net burn","ARR growth","Tomasz Tunguz"]
ai_summary: "Explore the shifting dynamics of startup burn multiples in 2023, highlighting capital efficiency trends and spending changes."
date: 2023-04-03
lastmod: 2026-07-30
canonical_url: https://www.tomtunguz.com/burn-multiple-2023/
author: "Tomasz Tunguz"
---

Burn multiple measures the capital efficiency of a startup. Burn multiple calculated like this : net burn divided by net new ARR. Startup burn multiples have changed markedly in 2023.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/ukvpkyxdxr6agml63etm.png)

Companies with more efficient burn multiples between 1-2 plan to increase their net burn per new dollar of bookings by between 14-40%. In contrast, startups with higher operating expenses will reduce their burn multiple by 34-70%. The average startup with a burn multiple of 5 plans to reduce to 1.5. 

Companies with burn multiples of 3 will stand firm, operating their businesses at the same levels of efficiency.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/li9ljnczbuiidoyhnhu4.png)
Curiously, there's no correlation between burn multiple & expected growth rate in 2023. 

The majority of the surveyed population plans to operate with burn multiple of 1.5 or less. 

With [the Series B & Series C capital markets barely open](https://tomtunguz.com/2023q1-venture-market/), the quantum of growth capital has plummeted nearly 80%. 

Startups' plans have shifted aggressively to capital efficiency, without a noticeable impact on ARR growth. We're all learning to achieve the same with less.