Master the Essential Startup
Terms for Success

Understanding the distinct terminology of the startup landscape is crucial for founders and investor alike. Master the language of venture capital and startup ecosystems.

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Accelerator

A time‐limited program that provides funding mentorship, and resources to startups.

Angel Investor

A high–net‐worth individual who invests early in startups in exchange for equity.

Acquisition

The process of one company buying or merging with another.

Anti-Dilution

Provisions that protect an investor’s ownership percentage when new shares are
issued at a lower price.

Advisory Board

A group of experts who guide a startup without formal management roles.

Bootstrapping

Funding a startup’s growth using personal savings or revenue, not outside capital.

Burn Rate

The speed at which a startup spends its cash reserves before reaching profitability.

Board (of Directors)

Group elected to oversee strategic and operational decisions

Bridge Financing

Short-term funding used to “bridge” a startup to its next round of financing.

Benchmark

Standard performance metrics used to measure progress and compare results.

Convertible Note

A debt instrument that converts into equity at a future financing round.

Cap Table

A spreadsheet showing the company’s equity ownership and dilution across rounds.

Crowdfunding

Raising capital from many small contributions, typically via online platforms.

Carry (Carried Interest)

The share of profits that VC fund managers earn once investors are repaid.

Customer Acquisition Cost (CAC)

The cost to acquire a new customer, a key metric for growth.

Dilution

Reduction in existing shareholders’ ownership percentages when new shares are issued.

Down Round

A financing round where the company’s valuation is lower than in previous rounds.

Due Diligence

The process of thoroughly investigating a startup before making an investment.

Drag-Along Rights

Clauses that allow majority shareholders to force minority shareholders to join in a sale.

Deal Flow

The rate at which investment opportunities come to a VC or investor.

Exit Strategy

The plan for how investors and founders will eventually realize returns (e.g., IPO).

Equity

Ownership in a company, typically represented by shares.

ESOP

Employee Stock Option Pool; shares set aside to incentivize employees.

Early-Stage Funding

Investments made when a startup is still in its initialdevelopment phase.

EBITDA

Earnings before interest, taxes, depreciation, and amortization; a measure of operational
performance.

Follow-on Investment

Additional funding provided in later rounds to support growth.

Fundraising Round

A distinct stage (e.g., Seed, Series A) when a startup raises capital.

Fund of Funds (FoF)

An investment vehicle that allocates capital into several venture funds.

Founder

One or more individuals who start the company and drive its early vision

Full Ratchet

An anti-dilution mechanism that adjusts conversion prices to the lowest subsequent round price.

Growth Hacking

Creative, low-cost strategies to rapidly grow a startup’s user base.

Gross Margin

Revenue minus cost of goods sold, reflecting operational efficiency.

General Partner (GP)

The VC firm’s decision-makers who manage investments.

Growth Equity

Capital provided to mature companies to accelerate expansion without full control.

Guerrilla Marketing

Unconventional, low-budget marketing tactics used to create buzz

Hustle

The relentless energy drive that founders and startups embody to overcome challenges.

Hackathon

An event where teams rapidly prototype solutions, often sparking innovative ideas.

Hypergrowth

Extremely rapid business growth, a key goal for many startups and VC portfolios.

Hurdle Rate

The minimum acceptable return on an investment, used to screen opportunities.

High-Impact

Describes initiatives that significantly influence growth or market position..

Incubator

A program that nurtures early-stage startups with
resources and office space before they’re ready to scale.

Investor

An individual or firm that provides capital to startups expecting future returns

Ideation

The creative process of generating and refining a business idea.

IPO (Initial Public Offering)

Process by which a private company goes public by issuing shares to the public.

Investment Thesis

A clear rationale outlining why a startup is a promising investment opportunity.

J Curve

A graph that shows negative early returns turning into rapid growth over time.

Joint Venture

A strategic partnership where two or more parties collaborate on a business project.

Job-to-be-Done

A framework for understanding customer needs by focusing on the underlying problem to solve.

Jumpstart

The initial boost (often financial or strategic) that propels a startup forward.

Jolt

A sudden infusion of energy or capital that accelerates growth (often used informally).

Key Performance Indicators (KPIs)

Specific metrics used to track the success and health of a startup.

Kickstarter

A popular crowdfunding platform often used for product validation and early-stage funding.

Know Your Customer (KYC)

Legal requirements for financial institutions to verify the identity of their clients.

K-Factor

A metric used to measure the virality of a product or service.

Knowledge Transfer

The process of sharing information and skills within a team or organization.

Lead Investor

The primary investor in a financing round who sets the terms and coordinates other participants.

Liquidation Preference

Determines the order and amount of payout to investors during an exit or liquidation.

Letter of Intent (LOI)

A non-binding document outlining the preliminary agreement between parties in a deal.

Lean Startup

A methodology for developing businesses and products that aims to shorten product development cycles.

Limited Partner (LP)

An investor in a venture capital fund who provides capital but does not manage the fund.

Minimum Viable Product (MVP)

The simplest version of a product that allows a team to collect maximum validated learning.

Monthly Recurring Revenue (MRR)

A key metric for subscription-based businesses, representing predictable monthly income.

Management Buyout (MBO)

A transaction where the existing management team purchases the company.

Market Penetration

The extent to which a product is recognized and bought by customers in a particular market.

Mergers and Acquisitions (M&A)

The consolidation of companies or assets through various financial transactions.

Non-Disclosure Agreement (NDA)

A legal contract that protects sensitive information shared between parties.

Networking

The process of interacting with others to exchange information and develop professional contacts.

Net Promoter Score (NPS)

A metric used to measure customer loyalty and satisfaction.

Non-Compete Clause

A contract provision where an employee agrees not to enter into competition with the employer.

Negative Covenants

Provisions in a legal agreement that prevent a company from taking certain actions.

Options (Stock Options)

Financial instruments that give the holder the right to buy or sell stock at a set price.

Operating Agreement

A legal document that outlines the ownership and operating procedures of an LLC.

Outsourcing

The practice of hiring external parties to perform services or create goods.

Overhead

The ongoing business expenses not directly attributed to creating a product or service.

Opportunity Cost

The potential benefit that is given up when one alternative is selected over another.

Pivot

A fundamental change in business strategy to test a new approach or direction.

Pitch Deck

A presentation used by founders to showcase their startup to potential investors.

Pre-money Valuation

The valuation of a company before it receives a new round of investment.

Post-money Valuation

The valuation of a company after it receives a new round of investment.

Product-Market Fit

The degree to which a product satisfies a strong market demand.

Qualified Financing

A financing round that meets certain criteria, often triggering the conversion of notes.

Quarterly Review

A formal assessment of a company's performance over a three-month period.

Quality Assurance (QA)

The process of ensuring that a product or service meets specified requirements.

Quantitative Analysis

The use of mathematical and statistical modeling to understand behavior and performance.

Quorum

The minimum number of members required to be present for a meeting to be valid.

ROI (Return on Investment)

A measure used to evaluate the efficiency or profitability of an investment.

Runway

The amount of time a startup has before it runs out of cash, based on its current burn rate.

Right of First Refusal (ROFR)

A contractual right to enter into a business transaction before anyone else.

Recapitalization

The process of restructuring a company's debt and equity mixture.

Revenue Model

The framework for how a company generates income from its products or services.

Seed Funding

The initial capital raised by a startup to prove a concept and start operations.

Series A, B, C

Sequential rounds of investment as a startup grows and scales.

SaaS (Software as a Service)

A software distribution model in which applications are hosted by a provider.

Scalability

The ability of a business to grow and handle increased demand without being hampered.

Sweat Equity

Ownership interest or stock given in exchange for labor and mental effort.

Term Sheet

A non-binding agreement setting forth the basic terms and conditions of an investment.

Traction

Evidence that a product or service is gaining momentum and attracting customers.

Total Addressable Market (TAM)

The total revenue opportunity that is available if 100% market share is achieved.

Target Audience

The specific group of consumers most likely to want your product or service.

Top-Line Growth

An increase in gross sales or revenue over a specific period

Unicorn

A privately held startup valued at over US $1 billion.

User Acquisition

Process of attracting and converting new users or customers.

Unit Economics

The direct revenues and costs associated with a single unit of a product or service.

Upside Potential

Maximum expected gain from an investment, reflecting growth possibilities.

Unique Value Proposition

The degree to which a product satisfies a strong market demand.

Venture Capital

Investment in early-stage companies with high growth potential, typically for equity.

Valuation

The process of determining the current worth of a startup, used during fundraising.

VC Fund

A pooled investment vehicle managed by a VC firm to invest in startups.

Vesting

The process by which employees earn the right to their stock options or equity over time.

Viral Growth

Rapid, exponential growth often driven by word-of-mouth and network effects.

Warrant

A financial instrument giving the right to purchase stock at a specific price within a set period.

Waterfall

Structure outlining the order in which returns are paid to investors after an exit.

Working Capital

The funds available to a startup for day-to-day operations.

Weighted Average Anti-Dilution

A mechanism that adjusts conversion price based on new and existing share prices.

Warm Intro

An introduction to investors or partners made through a trusted intermediary.

XaaS (Anything as a Service)

A business model in which various services are provided on a subscription basis.

XIRR

Metric to calculate the annualized internal rate of return for irregular cash flows.

X-Factor

The unique quality or competitive edge that differentiates a startup from its peers.

X-Growth

Informal shorthand for exponential or “x-times” growth, indicating rapid scaling.

X-Scale

Refers to the capacity of a startup to grow or scale significantly.

Y Combinator

One of the most well-known startup accelerators (e.g., Airbnb, Dropbox).

YOY (Year-over-Year) Growth

A metric that compares performance from one year to the next.

Yield

The return generated on an investment, often expressed as a percentage.

Young Founders

Entrepreneurs who are driving startup innovation

Yearly Run Rate

A projection of annual revenue based on current performance.

Zero to One

Creating something entirely new rather than incremental improvements.

Zebra

Startups focusing on sustainability and profitability rather than speculative valuations.

Zenith

The peak or highest point of growth and success for a startup

Zeal

The passionate enthusiasm and energy founders bring to drive their company’s vision.

Zillion

Informal slang for a very large, almost unquantifiable number.

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