Tomasz Tunguz Blog · 2023-04-03
· 1158d
2023 Startup Burn Multiple Shifts: Capital Efficiency Over Growth
Startup burn multiples shifted dramatically in 2023 as capital markets contracted by 80%. Companies with efficient burn multiples (1-2) plan to increase spending, while those with higher multiples (3+) are reducing costs to target an industry standard of 1.5 or below, with no correlation to growth expectations.
Metrics in this report
Burn Multiple Target
1.5ratio
median/target
industry standard for 2023
Efficient Burn Multiple Range
1-2ratio
range
high-efficiency startups
Efficient Startups Spend Increase
14-40%
range
companies with 1-2 burn multiple
Growth Capital Contraction
80%
decline
Series B/C funding reduction
High Burn Multiple Baseline
5ratio
average
startups planning reductions
Inefficient Startups Reduction
34-70%
range
companies with higher multiples
Neutral Burn Multiple
3ratio
point estimate
companies maintaining efficiency levels