## The 'Burn Multiple' Reality Check
In 2021, startups bragged about growing from $2M to $4.5M ARR (125% growth). That sounds incredible until you check the bank account. If they burned $8.5M in cash to generate that $2.5M in new revenue, their Burn Multiple is 3.4x. They are literally spending $3.40 to buy $1.00 of software revenue.
### FAQ
**Q: Why was this ignored for so long?**
A: Zero interest rates allowed companies to endlessly raise bridge rounds. When capital dried up, VCs stopped looking at top-line growth and exclusively looked at the Burn Multiple. A company growing 60% with a 1.2x Burn Multiple is infinitely more valuable and survivable than a company growing 150% with a 3.5x Burn Multiple.