Startup & VC Glossary
Essential terminology every founder and entrepreneur should know. Master the language of startups, venture capital, and innovation.
A
Angel Investor
A high-net-worth individual who provides capital to early-stage startups in exchange for equity or convertible debt.
Accelerator
A fixed-term program providing mentorship, education, and resources to cohorts of startups, usually culminating in a demo day.
ARR (Annual Recurring Revenue)
The yearly value of recurring revenue from subscriptions or contracts, a key metric for SaaS companies.
B
Burn Rate
The rate at which a company spends its cash reserves before generating positive cash flow, typically measured monthly.
Bootstrap
Building and growing a company using personal finances or operating revenues without external investment.
C
Cap Table
Capitalization table showing ownership stakes, equity dilution, and value of equity in each round of investment.
Churn Rate
The percentage of customers who stop using a service during a given time period, critical for subscription businesses.
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer, including marketing and sales expenses.
D
Dilution
The decrease in existing shareholders' ownership percentage when new shares are issued, typically during funding rounds.
Due Diligence
The comprehensive investigation and analysis conducted by investors before committing capital to ensure accuracy of claims and assess risks.
E
Equity
Ownership interest in a company, represented by shares of stock that entitle holders to a proportion of profits and voting rights.
Exit Strategy
A plan for how investors and founders will liquidate their stake in a company, typically through acquisition or IPO.
I
Incubator
An organization that helps early-stage companies develop by providing workspace, mentorship, and networking opportunities over an extended period.
IP (Intellectual Property)
Intangible assets including patents, trademarks, copyrights, and trade secrets that provide competitive advantage and legal protection.
IPO (Initial Public Offering)
The process of offering shares of a private company to the public in a new stock issuance.
L
LTV (Lifetime Value)
The total revenue a business can expect from a single customer account throughout their relationship.
M
MVP (Minimum Viable Product)
A basic version of a product with just enough features to satisfy early customers and provide feedback for future development.
P
Provisional Patent Application
An initial U.S. patent filing that is not examined and is not an issued patent. It can establish an early filing date for what it discloses, and a non-provisional application must generally follow within 12 months to keep that date.
Product-Market Fit
The degree to which a product satisfies strong market demand, typically demonstrated through customer retention and organic growth metrics.
Pre-money vs Post-money Valuation
Pre-money valuation is a company's worth before investment; post-money includes the new investment amount.
Pivot
A fundamental change in business strategy, typically in response to market feedback or changing conditions.
Pro Rata Rights
The right of existing investors to participate in future funding rounds to maintain their ownership percentage.
R
Runway
The amount of time a startup can operate before running out of cash, calculated by dividing current cash by monthly burn rate.
S
Startup Studio
A company that systematically creates multiple startups by providing capital, resources, and expertise. Unlike traditional incubators, studios take an active role in ideation and company building.
Series A, B, C Funding
Sequential rounds of venture capital funding. Series A typically funds scaling operations, Series B focuses on market expansion, and Series C prepares for exit or further growth.
SaaS (Software as a Service)
A software licensing and delivery model where applications are hosted centrally and accessed via subscription.
T
Term Sheet
A non-binding agreement outlining the terms and conditions of an investment, including valuation, investment amount, and investor rights.
U
Unicorn
A privately held startup company valued at over $1 billion.
V
Venture Capital (VC)
Private equity financing provided by venture capital firms to startups and small businesses with high growth potential in exchange for equity ownership.
Valuation
The process of determining the current worth of a company, crucial for fundraising and equity distribution.
Vesting Schedule
A timeline that determines when employees or founders earn full ownership of stock options or equity grants.
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