Learn the language of startups.
100 essential terms every entrepreneur should know. From MVP to Series A, speak like a founder.
Fundamentals
15 termsStartup
A young company designed to grow fast and solve a problem in a new or innovative way. Unlike traditional small businesses, startups aim for rapid scale and often seek outside investment.
Founder
The person (or people) who start a company. Founders typically set the vision, build the initial team, and take on significant risk in exchange for equity ownership.
Co-founder
A partner who shares founding responsibilities. Co-founders often bring complementary skills—one might be technical while another handles business development.
MVP (Minimum Viable Product)
The simplest version of your product that still delivers value to early users. An MVP lets you test your core idea quickly without building everything first.
Pivot
A fundamental change in your business strategy while keeping one foot planted. Pivots happen when you learn your original idea isn't working, but you spot a better opportunity nearby.
Product-Market Fit
The magical moment when customers love your product so much that growth becomes organic. You'll know you have it when customers actively recommend you and retention is strong.
Business Model
How your company makes money. It defines who pays you, how much they pay, and why they keep paying. Common models include subscriptions, marketplaces, advertising, and direct sales.
SaaS (Software as a Service)
Software delivered over the internet, typically via monthly or annual subscription. Think Slack, Notion, or Canva. SaaS businesses are popular because they generate predictable recurring revenue.
B2B (Business-to-Business)
Companies that sell to other companies rather than individual consumers. B2B sales often involve longer cycles, higher price points, and relationship-based selling.
B2C (Business-to-Consumer)
Companies that sell directly to individual consumers. B2C businesses typically need to reach large audiences and often compete on price, convenience, or brand.
Marketplace
A platform that connects buyers and sellers, taking a cut of each transaction. Airbnb, Uber, and Etsy are marketplaces. The challenge: you need both sides to make it work.
Platform
A product that creates value by facilitating exchanges between two or more groups. Platforms become more valuable as more people use them—this is called a network effect.
Freemium
A pricing model where the basic product is free, but users pay for premium features. The goal is to get massive adoption at the free tier, then convert a percentage to paying customers.
Scalability
The ability to grow revenue faster than costs. A scalable business can serve 10x more customers without 10x more work. Software is highly scalable; consulting is not.
Disruption
When a smaller company with fewer resources successfully challenges an established incumbent, usually by targeting overlooked segments or offering a simpler, cheaper solution.
Funding
20 termsBootstrapping
Building a company using only personal savings and revenue—no outside investment. Bootstrapped founders maintain full control but grow more slowly.
Angel Investor
A wealthy individual who invests their own money in early-stage startups, typically writing checks from $10K to $250K. Angels often provide mentorship alongside capital.
Venture Capital (VC)
Professional investors who manage funds from institutions and wealthy individuals, investing in high-growth startups. VCs typically invest larger amounts and expect significant returns.
Seed Round
The first significant round of funding, typically $500K to $3M, used to prove the concept works and find initial product-market fit.
Series A
The first major institutional round, typically $5M to $20M. At this stage, you should have proven the business model and be ready to scale.
Series B and Beyond
Later funding rounds that fuel continued growth. Each subsequent round typically involves larger amounts and higher expectations for traction and revenue.
Pre-seed
The earliest stage of funding, often from friends, family, or early-stage funds. Pre-seed rounds are typically under $500K and fund the initial exploration phase.
Term Sheet
A non-binding document outlining the key terms of an investment deal. It covers valuation, investment amount, board seats, and investor rights before lawyers draft final documents.
Due Diligence
The investigation process investors conduct before committing capital. They'll examine your financials, legal documents, technology, team, and market opportunity.
Valuation
What your company is worth. Pre-money valuation is before new investment; post-money includes it. If you raise $1M at $4M pre-money, your post-money valuation is $5M.
Cap Table
A spreadsheet showing who owns what percentage of your company. It tracks all equity holders: founders, employees, and investors across all funding rounds.
Dilution
The reduction in ownership percentage when new shares are issued. If you own 50% and raise money, your percentage decreases—but ideally, your smaller slice becomes more valuable.
Convertible Note
A loan that converts to equity at a future funding round. Notes delay valuation discussions and typically include a discount and valuation cap for early investors.
SAFE (Simple Agreement for Future Equity)
Created by Y Combinator, SAFEs are simpler than convertible notes. You receive money now in exchange for the right to future equity, with no interest or maturity date.
Burn Rate
How much money your company spends each month. If you have $600K and burn $50K/month, you have 12 months of runway. Keeping burn rate manageable is crucial for survival.
Runway
How long your company can survive at current spending levels. Runway = Cash in bank ÷ Monthly burn rate. Most startups try to maintain 12-18 months of runway.
Pitch Deck
A presentation (usually 10-15 slides) used to explain your business to investors. Covers problem, solution, market, traction, team, and ask.
Lead Investor
The investor who sets the terms and does the most work in a funding round. Other investors often follow the lead's due diligence and terms.
Pro Rata Rights
The right for existing investors to maintain their ownership percentage in future rounds by investing additional capital.
Down Round
A funding round at a lower valuation than the previous one. Down rounds are painful because they dilute existing shareholders more and signal trouble.
Legal & Equity
15 termsEquity
Ownership in a company, usually represented by shares of stock. Founders, employees, and investors all own equity—their stake in the company's future value.
Vesting
A schedule that determines when you actually own your equity. Standard is 4-year vesting with a 1-year cliff—you earn nothing until year one, then earn monthly.
Cliff
The period before any equity vests. A 1-year cliff means if you leave before 12 months, you get nothing. After the cliff, vesting typically happens monthly.
Stock Options
The right to buy company stock at a fixed price. Options are valuable when the company grows—you can buy at the old price and sell at the new, higher value.
Exercise
Using your stock options to actually buy shares. You pay the exercise price set when options were granted. Early exercise can have tax advantages.
Common Stock
The type of equity founders and employees typically receive. Common stockholders get paid last in an exit but share fully in the upside.
Preferred Stock
What investors receive. Preferred stockholders get special rights: they get paid first in an exit and may have additional protections like anti-dilution provisions.
Liquidation Preference
Investors' right to get their money back before anyone else in an exit. A 1x preference means they get their investment back before common stockholders see anything.
Anti-dilution
Protection for investors if future rounds happen at lower valuations. The formula adjusts their ownership to reduce the impact of down rounds.
409A Valuation
An independent appraisal of your company's stock value, required by the IRS for granting stock options. This fair market value is typically lower than what investors pay.
IP (Intellectual Property)
Creations of the mind that have legal protection: patents, trademarks, copyrights, and trade secrets. Startups should protect their core IP early.
NDA (Non-Disclosure Agreement)
A legal contract to keep information confidential. While common in business, most investors won't sign NDAs—they see too many similar ideas.
Non-compete
An agreement restricting someone from working for competitors for a period after leaving. Enforceability varies by state—California largely doesn't enforce them.
Incorporation
Forming a legal entity for your company. Most startups incorporate as Delaware C-Corps because of favorable laws and investor familiarity.
Delaware C-Corp
The standard legal structure for venture-backed startups. Delaware's business-friendly laws and established case law make it the default choice.
Metrics
15 termsCustomer Acquisition Cost (CAC)
How much you spend to get one new customer. Includes marketing, sales, and related costs. A sustainable business needs CAC significantly lower than customer lifetime value.
Lifetime Value (LTV)
The total revenue you expect from a customer over their entire relationship with you. Healthy businesses typically have LTV at least 3x higher than CAC.
Monthly Recurring Revenue (MRR)
Predictable revenue you receive every month from subscriptions. MRR is the heartbeat metric for SaaS businesses—watch it religiously.
Annual Recurring Revenue (ARR)
MRR multiplied by 12. ARR is the standard way to express the size of subscription businesses and is the basis for many SaaS valuations.
Churn
The rate at which customers leave. Monthly churn of 5% means you lose half your customers yearly. Reducing churn is often easier than acquiring new customers.
Net Revenue Retention (NRR)
Revenue from existing customers compared to a year ago, including expansions and contractions. NRR over 100% means your existing customers spend more over time.
Gross Margin
Revenue minus the direct costs of delivering your product or service. Software typically has 70-90% gross margins; physical products are much lower.
Conversion Rate
The percentage of people who take a desired action: visitors who sign up, trials that become paid, leads that become customers.
Active Users
People who actually use your product regularly. DAU (daily active users) and MAU (monthly active users) measure engagement differently.
Cohort Analysis
Grouping users by when they joined and tracking their behavior over time. Cohorts reveal whether you're actually improving retention and engagement.
Vanity Metrics
Numbers that look good but don't drive business success: total signups, page views, or downloads. Focus on metrics that matter: active users, revenue, retention.
North Star Metric
The single metric that best captures the core value you deliver to customers. Airbnb uses nights booked; Facebook uses daily active users.
Unit Economics
The fundamental profitability of acquiring and serving one customer. Good unit economics mean you make money on each customer; bad means you lose money at scale.
ARPU (Average Revenue Per User)
Total revenue divided by number of users. ARPU helps you understand the value of your user base and track it over time.
Payback Period
How long it takes to recover your customer acquisition cost from a customer's payments. Shorter payback periods mean faster reinvestment in growth.
Growth & Marketing
15 termsGo-to-Market (GTM)
Your strategy for reaching customers: who you're selling to, through what channels, with what message. Great products can fail with poor GTM.
Product-Led Growth
A GTM strategy where the product itself drives acquisition, conversion, and expansion. Users discover value through free usage rather than sales pitches.
Sales-Led Growth
A GTM strategy built around a sales team that nurtures leads and closes deals. Common in enterprise B2B where deals are large and complex.
Inbound Marketing
Attracting customers through content, SEO, and value—they come to you. Inbound is often more sustainable than paid advertising.
Outbound Sales
Proactively reaching out to potential customers through cold emails, calls, or LinkedIn. Outbound is common for B2B sales with identifiable target buyers.
Funnel
The stages customers move through: awareness → interest → consideration → purchase. Understanding your funnel helps identify where you're losing people.
Lead Generation
Attracting potential customers who might buy from you. Leads are people who've shown interest—signed up for a newsletter, requested a demo, or downloaded content.
Growth Hacking
Creative, data-driven experiments to drive rapid growth. Growth hackers test unconventional tactics and double down on what works.
Viral Coefficient
How many new users each existing user brings in. A coefficient above 1 means exponential growth—each user brings more than one new user.
Network Effects
When a product becomes more valuable as more people use it. WhatsApp, LinkedIn, and Airbnb all benefit from powerful network effects.
Total Addressable Market (TAM)
The total revenue opportunity if you captured 100% of your market. Investors want to see a TAM large enough to support a big outcome.
Serviceable Addressable Market (SAM)
The portion of TAM you can realistically serve given your business model and geography. SAM is more useful for near-term planning.
Competitive Moat
What protects your business from competition. Moats include network effects, switching costs, brand, exclusive data, or regulatory advantages.
First-Mover Advantage
The benefits of being first to market: brand recognition, customer relationships, and learning. But execution often matters more than timing.
Beachhead Market
The initial, focused market segment you'll dominate before expanding. Start narrow, win completely, then broaden. Think Amazon starting with books.
Ecosystem
6 termsAccelerator
An intensive program (usually 3-6 months) that provides funding, mentorship, and resources. Y Combinator, Techstars, and 500 Startups are well-known examples.
Incubator
An organization that nurtures early-stage startups with workspace, resources, and guidance. Incubators are often less structured than accelerators.
Demo Day
The culmination of an accelerator program where startups pitch to hundreds of investors. A strong Demo Day performance can jumpstart your fundraise.
Pitch Competition
A contest where startups present to judges for prizes, funding, or exposure. Great practice for fundraising and valuable for visibility.
Startup Ecosystem
The network of founders, investors, mentors, service providers, and institutions that support entrepreneurship in a region or community.
Venture Studio
An organization that builds startups systematically, often providing the initial team and resources. Studios typically take significant equity in exchange.
Product & Tech
5 termsSprint
A fixed time period (usually 1-2 weeks) where a team focuses on specific goals. Sprints create rhythm and accountability in product development.
Iteration
Building in cycles of creating, testing, learning, and improving. Each iteration gets you closer to something customers love.
Technical Debt
The future cost of quick-and-dirty code choices. Some debt is acceptable for speed, but too much slows you down and creates bugs.
API (Application Programming Interface)
How software systems talk to each other. APIs let you integrate with other services or let others build on top of your platform.
Tech Stack
The combination of technologies used to build your product: programming languages, frameworks, databases, and infrastructure.
Team & Culture
4 termsEquity Split
How ownership is divided among co-founders. Equal splits are simple but may not reflect contributions. Discuss this early—it only gets harder.
Advisor
An experienced person who provides guidance to founders, typically in exchange for a small equity stake (0.1-1%).
Culture
The shared values, behaviors, and practices that define how your team works together. It's what happens when the founders aren't in the room.
Remote-First
A company structure where remote work is the default. Remote-first companies design processes around distributed teams.
Exit & Success
5 termsExit
The event where founders and investors realize returns on their equity—typically through acquisition or IPO.
IPO (Initial Public Offering)
When a company first sells shares to the public on a stock exchange. IPOs provide liquidity for early investors and employees.
Acquisition (M&A)
When one company buys another. Acquisitions can be for talent, technology, customers, or market share. Most startup exits are acquisitions.
Unicorn
A private company valued at $1 billion or more. Building a unicorn shouldn't be the goal; building something valuable should be.
Fail Fast
The principle of quickly testing ideas and abandoning those that don't work. The faster you identify dead ends, the sooner you find the path forward.