Glossary of Terms

This non-exhaustive glossary covers commonly-encountered terms and acronyms you might encounter when creating a pitch deck or entering discussions with investors.

A

• ARR (Annual Recurring Revenue) : The yearly value of subscription-based revenue.
• ACV (Annual Contract Value) : The average annualized revenue per customer contract.
• Angel Investor : An individual who invests their own money in early-stage startups, typically in exchange for equity.
• Accelerator : A program that provides startups with mentorship, capital, and connections to potential investors over a fixed period, typically a few months.

B

• B2B (Business-to-Business) : A business model where a company sells products or services to other businesses.
• B2C (Business-to-Consumer) : A business model where a company sells products or services directly to consumers.
• Burn Rate : The rate at which a company is losing money, typically measured monthly.
• Bootstrapping : The process of starting and growing a company using only personal finances or operating revenues.
• Bottom-up Analysis : A method of estimating market size by starting with a small unit (like one sale) and extrapolating to the larger market.

C

• CAC (Customer Acquisition Cost) : The cost of acquiring a new customer, including marketing and sales expenses.
• CAGR (Compound Annual Growth Rate) : The rate of return required for an investment to grow from its beginning balance to its ending balance, assuming profits are reinvested.
• Churn Rate : The rate at which customers stop doing business with a company over a given period.
• Convertible Note : A form of short-term debt that converts into equity, typically in conjunction with a future financing round.
• Crowdfunding : The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.

D

• DAU (Daily Active Users) : The number of unique users who engage with a product or service in a day.
• Due Diligence : A comprehensive appraisal of a business undertaken by a prospective buyer or investor to establish its assets and liabilities.
• Dilution : The decrease in existing shareholders' ownership percentage of a company as a result of the company issuing new equity.

E

• Equity : Ownership interest in a company, typically in the form of stock.
• Exit Strategy : A plan for the founders or investors to sell their ownership in a company.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) : A measure of a company's overall financial performance.
• Ecosystem : The network of organizations involved in the delivery of a specific product or service through both competition and cooperation.

F

• Freemium : A business model where basic services are provided free of charge while more advanced features must be paid for.
• First Mover Advantage : The competitive advantage gained by the initial occupant of a market segment.
• FOMO (Fear of Missing Out) : In the startup context, the anxiety that an investor might experience if they don't participate in an investment opportunity.

G

• GMV (Gross Merchandise Value) : The total value of merchandise sold through a particular marketplace over a certain time frame.
• Growth Hacking : A marketing technique focused on rapid experimentation across marketing channels to identify the most effective ways to grow a business.

I

• IP (Intellectual Property) : Creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names and images used in commerce.
• IPO (Initial Public Offering) : The first time a company offers its stock for public sale on the stock market.
• Incubator : An organization designed to help startup companies grow by providing services such as management training or office space.

K

• KPI (Key Performance Indicator) : A measurable value that demonstrates how effectively a company is achieving key business objectives.

L

• LTV (Lifetime Value) : The predicted net profit attributed to the entire future relationship with a customer.

M

• MAU (Monthly Active Users) : The number of unique users who engage with a product or service in a month.
• MRR (Monthly Recurring Revenue) : A measure of the predictable and recurring revenue components of a company's business.
• MVP (Minimum Viable Product) : A product with enough features to attract early-adopter customers and validate a product idea.
• M&A (Mergers and Acquisitions) : The consolidation of companies or assets through various types of financial transactions.

N

• NPS (Net Promoter Score) : An index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others.

P

• Pivot : A structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.
• Pre-money Valuation : The value of a company prior to an investment or financing.
• Post-money Valuation : The value of a company after an investment or financing.

R

• ROI (Return on Investment) : A performance measure used to evaluate the efficiency of an investment.
• Runway : The amount of time until a company runs out of money, based on its current burn rate.
• Retention Rate : The percentage of customers who continue using a product or service over a given time period.

S

• SaaS (Software as a Service) : A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted.
• Scalability : The ability of a business to cope with increased market demand and grow rapidly.
• Seed Funding : The first official equity funding stage, typically used to start the business and fund initial operations.
• Series A, B, C : Progressive rounds of venture capital financing, each typically larger than the last.
• Stealth Mode : When a startup company operates in secrecy to avoid alerting competitors to a new product or service.

T

• TAM (Total Addressable Market) : The total market demand for a product or service.
• Term Sheet : A non-binding agreement setting forth the basic terms and conditions under which an investment will be made.
• Traction : Evidence of product/market fit and growth, often shown through user adoption, revenue growth, or engagement metrics.

U

• Unicorn : A privately held startup company valued at over $1 billion.
• Unit Economics : The direct revenues and costs associated with a particular business model expressed on a per unit basis.

V

• VC (Venture Capital) : Financial capital provided to early-stage, high-potential, growth startup companies.
• Valuation : An estimation of the worth of a business.
• Vesting : The process by which an employee or founder earns the right to their stock options or other equity compensation over time.