Burn multiple
Net cash burned divided by net new ARR: how many dollars a company burns to add one dollar of recurring revenue. Lower is better.
The burn multiple, popularized by David Sacks, measures capital efficiency of growth: net burn over a period divided by net new ARR added in that period. A multiple of 1 means the company burned a dollar to add a dollar of recurring revenue; on Sacks’s scale under 1x is amazing, 1 to 1.5x great, 1.5 to 2x good, 2 to 3x suspect, above 3x bad, and the ratio rises sharply as a company stalls. Its appeal is that it captures in one number whether growth is being bought cheaply or expensively.
The structural caveat for deep tech is that the metric is defined only when there is recurring revenue to put in the denominator. A pre-revenue quantum company has net new ARR of zero, so the burn multiple is either infinite or undefined; computing it is meaningless, and dressing burn up as a multiple against a sliver of NRE or pilot revenue is worse than not reporting it. The metric belongs to the post-traction phase, after a repeatable revenue line exists.
The honest pre-revenue substitute is to express efficiency against milestones rather than revenue: how much capital is consumed to reach the next proof that re-rates the company (a demonstrator, a fidelity threshold, a qualified system). That figure is the deep tech cousin of capital efficiency, it lets a board compare planned against actual spend per unit of de-risking, and it sets up the burn multiple to be used properly once recurring revenue finally arrives. Reporting milestone cost pre-revenue and the burn multiple post-revenue is the credible sequence; forcing the multiple early is a tell that the metrics were chosen to flatter rather than to inform.
The burn multiple needs recurring revenue in the denominator, so for a pre-revenue quantum company it is simply undefined, and pretending otherwise is a category error. The honest pre-revenue analogue is dollars per technical milestone: capital consumed to reach the next value-creating proof. Quote the burn multiple only once real recurring revenue exists; before that, report milestone cost and runway, and say plainly that the multiple does not yet apply.
Post-first-revenue: a company burns $3,000,000 net over a year and adds $2,000,000 of net new ARR. Burn multiple = 3,000,000 / 2,000,000 = 1.5x (the boundary between great and good on Sacks's scale). Pre-revenue, net new ARR is 0, the ratio divides by zero and is meaningless: the right figure is, e.g., "$4M to reach the demonstrator milestone", not a burn multiple.
From definition to decision
Model this in your own round, scenarios, dilution and runway, in the founder workspace.