May 30, 2024

Startup Glossary

Learn what these popular startup terms and startup jargon mean, and get in the know. Don't see a term you want defined? Check back regularly for some updates; we're always adding to the list.

Startup Glossary

Common Startup Acronyms You Should Know

  1. VC: Venture Capital. Investors who funds high-growth startups.
  2. B2B: Business-to-Business. Selling to other companies.
  3. B2C: Business-to-Consumer. Selling to consumers.
  4. DTC: Direct to Consumer. Selling direct to consumers and skipping any middleman.
  5. MVP: Minimum Viable Product. Simplest version of your product to validate market interest.
  6. KPI: Key Performance Indicator. Metrics you measure to evaluate success in specific objectives.
  7. CAC: Customer Acquisition Cost. Cost of getting a new customer.
  8. LTV: Customer Lifetime Value. Total revenue of a customer over time.
  9. MRR: Monthly Recurring Revenue. Predictable monthly income, typically from subscriptions.
  10. ARR: Annual Recurring Revenue. MRR multiplied by 12.
  11. IPO: Initial Public Offering. First sale of shares to the public market.
  12. ROI: Return on Investment. Profit gained on an investment.

Startup Funding Terms

  1. Bootstrapping: Self-funding your startup.
  2. Seed Funding: Early-stage financing for idea development.
  3. Series A: First major financing round from VC firms.
  4. Series B: Funding rounds after Series A for more growth and expansion.
  5. Runway: Remaining time before you run out of cash.
  6. Burn Rate: The money you “burn” every month, so your speed of spending.
  7. Exit Strategy: Cash out plan, either an IPO or acquisition.
  8. SAFE Note: Simple Agreement for Future Equity, or a simple and fast investment instrument that promises equity in the future.
  9. Convertible Note: Debt that converts to equity under specific conditions.
  10. Data Room: Collection of important business documents to convince investors.
  11. Liquidation Preference: Who gets paid first when a company sells or closes.

Growth and Marketing Terms

  1. Pivot: Changing course based on market feedback.
  2. Beta Test: Trial of a product by actual users before the final public release.
  3. Unit Economics: Revenue and costs per single unit, product, or customer.
  4. Organic Growth: Growing your user base without paying for marketing.
  5. Growth Hacking: Low-cost marketing strategies for rapid user acquisition.
  6. Guerrilla marketing: Unconventional promotional activities, with low-cost and high-impact.
  7. Funnel: User journey from awareness of product or service to actually buying it.
  8. Sales Cycle: A process in B2B from initial contact to closing a sale.
  9. Activation: The moment a user adopts your core features.
  10. Retention: Keeping users coming back to your product.
  11. Churn Rate: The percentage of users who stop using your product over time.

Equity and Valuation Terms

  1. Equity: Ownership stake in a company.
  2. Shares: Units of ownership.
  3. Stock Option: Right to buy shares at a set price in the future.
  4. ESOP: Employee stock ownership plan: Company shares given to employees as a benefit.
  5. Vesting Period: Time for employees to earn full ownership of awarded shares.
  6. Cliff: Initial lockup period before equity begins to vest.
  7. Valuation: Estimated total worth of your company.
  8. Pre-money Valuation: Your company’s value before any new investment.
  9. Post-money Valuation: Your company’s value after a new investment.
  10. Dilution: Decrease in ownership percentage from new shares.
  11. Cap Table: List of ownership structure and equity distribution.

Tech Terms

  1. SaaS: Software as a Service. Selling apps over the internet as a service.
  2. UI: User Interface. The look and feel of your software.
  3. UX: User Experience. How easy and enjoyable your software is to use.
  4. API: Application Programming Interface. The connection between different software programs to share data and functionality.
  5. Backend: The part of the software users don't see directly (e.g. data storage, core functionalities, etc.)
  6. Frontend: The part of the product that users interact with (e.g. buttons, menus, etc.)
  7. Web-based: Software you use on a browser, or one that is not installed locally on your computer.
  8. Bug: An error or glitch that needs fixing.
  9. Agile Development: Building and iterating fast using feedback loops.
  10. Sprint: Building a focused set of features in a short amount of time.

Revenue Terms

  1. AOV: Average Order Value. The average amount customers spend per transaction.
  2. ARPU: Average Revenue Per User. The average amount each customer spends with you.
  3. COGS: Cost of Goods Sold. The price to produce your product.
  4. EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortization. Your operating income excluding non-cash expenses.
  5. Gross Margin: Your sales minus the cost of what you sold, divided by your sales.
  6. Gross Profit: Revenue minus cost of goods sold.
  7. Profit Margin: Percentage of revenue remaining after accounting all expenses.
  8. Upselling: Convincing customers to purchase a more expensive item or upgrade a product for a more profitable sale.
  9. Cross-selling: Selling a complementary product or service alongside your main offer.
  10. Breakeven: When total revenue equals total expenses.
  11. Profitability: When revenue is higher than total expenses.

Ecommerce Terms

  1. Dropshipping: Selling products from manufacturers without keeping your own inventory.
  2. Checkout Flow: Process of finalizing orders in a shopping cart.
  3. Abandoned Cart: Shoppers who add products to their cart but do not checkout.
  4. Brick and Mortar: Traditional physical store.
  5. Bundle: Selling multiple products or services together, usually at a discount.
  6. Chargeback: When a bank doesn’t release payment due to a customer dispute.
  7. Omnichannel: Selling on multiple channels with a unified experience.
  8. Social Commerce: Selling directly on social media platforms.

Market Research Terms

  1. TAM: Total Addressable Market. The total number of potential customers for your product or service.
  2. SAM: Serviceable Addressable Market. The portion of the TAM you can realistically reach with your current resources and strategy.
  3. SOM: Serviceable Obtainable Market. The most realistic and achievable segment of your SAM, considering immediate competition.
  4. Market Penetration: The percentage of the SAM you've captured with your product or service.
  5. Market Segmentation: Dividing your target market into smaller groups with similar characteristics and needs.
  6. Primary Research: Collecting data directly from your target audience through surveys, interviews, or focus groups.
  7. Secondary Research: Using existing data from market research firms, industry reports, or government statistics.
  8. Customer Persona: A detailed profile of your ideal customer, including their demographics, needs, and behaviors.
  9. Value Proposition: A clear and concise statement explaining how your product or service solves your customer's pain points and provides value.