How to use
This glossary is designed for readers who want clarity without detouring into jargon. If a term doesn’t change a decision, it’s usually optional vocabulary.
Each entry has a stable anchor link (for example: startup-terminology.html#runway). Use the “Copy link” button to share a definition in a Substack post or an internal page.
Glossary
A
ARPU — Average Revenue Per User
Average revenue per customer (monthly or annual).
ARPU = Total Revenue ÷ Total CustomersARR — Annual Recurring Revenue
Annualized recurring revenue (normalized to a yearly basis).
ARR = MRR × 12Why it matters: Common shorthand for scale in subscription businesses.
Angel Investor
An individual who invests early-stage capital, often before institutional funding.
B
B2B — Business to Business
A business that sells products or services to other businesses.
B2C — Business to Consumer
A business that sells directly to individual consumers.
Board of Directors
A group providing governance and oversight, often including investors and advisors.
Bootstrapped
Built using founder resources and/or operating revenue instead of external investment.
Why it matters: More control, usually slower (but often healthier) growth.
Burn Rate
How much cash the business spends per month beyond revenue (negative cash flow).
Why it matters: Burn determines how urgently you need revenue or funding.
Business Model
How the company creates, delivers, and captures value.
C
CAC — Customer Acquisition Cost
Total sales + marketing cost to acquire one customer.
CAC = Sales & Marketing Spend ÷ New CustomersCash Flow
Money moving in and out of the business.
Churn
Rate at which customers (or revenue) are lost over time.
Customer Churn = Customers Lost ÷ Customers at StartWhy it matters: You can't out-market a leaky bucket.
Convertible Note / Convertible Debt
A loan intended to convert into equity at a later valuation.
D
DTC — Direct to Consumer
A sales strategy where the brand sells directly to customers without retailers.
Disruption
Innovation that materially changes an existing market (cost, access, audience, expectations).
Due Diligence
The investor's investigation into the business (financial, legal, market, and operational).
E
Equity
Ownership interest in the company, represented by shares or a percentage.
Exit
The event where founders/investors realize returns (acquisition or IPO are common).
G
Gross Margin
Revenue remaining after direct delivery costs (hosting, support, infra).
Gross Margin = (Revenue − Cost of Service) ÷ RevenueGround Floor
The earliest stage of a venture (high risk, high uncertainty, potential upside).
I
ICP — Ideal Customer Profile
A crisp definition of the kind of customer you can serve best—who has the problem, feels it urgently, can pay, and can actually buy.
ICP (simple) = Industry + Role + Trigger + Must-have constraints + Ability to pay + Buying pathWhy it matters: ICP turns “anyone could use this” into a real go-to-market plan. It sharpens your messaging,pricing, channels, and roadmap—and it saves you from building features for people who will never convert.
Incubator / Accelerator
Programs that support startups with mentorship and resources (often for equity).
Rule of thumb: incubators skew earlier/longer; accelerators are time-boxed and demo-driven.
L
LTV / CLV — Lifetime Value
Total revenue expected from a customer over their lifetime.
Why it matters: A common guardrail is LTV ≥ 3× CAC.
M
MRR — Monthly Recurring Revenue
Predictable subscription revenue earned each month.
Why it matters: MRR is the baseline for growth, churn, retention, and forecasting.
MVP — Minimum Viable Product
The smallest product that delivers value and enables learning from real users.
N
NDA — Non-Disclosure Agreement
A legal agreement to protect confidential information from being shared.
Net Promoter Score (NPS)
A customer loyalty metric based on a 0-10 "likelihood to recommend" question that gauges satisfaction and growth potential. Respondents are grouped as Promoters (9-10), Passives (7-8), and Detractors (0-6).
NPS = % Promoters - % DetractorsWhy it matters: Scores range from -100 to 100 and indicate how likely customers are to recommend you.
NRR — Net Revenue Retention
Revenue retained from existing customers after churn + expansion.
Why it matters: NRR > 100% means your base is growing even without new sales.
P
POC — Proof of Concept
A demonstration that an idea is feasible (technical and/or commercial).
Pitch Deck
A short presentation used to explain the business to investors, partners, or customers.
Pivot
A significant change in direction based on learning (market, product, pricing, or channel).
Product-Market Fit (PMF)
Evidence the market strongly wants the product and will pay for it (and keep using it).
R
ROI — Return on Investment
Return received as a percentage of the invested amount.
Runway
How long the company can operate at the current burn rate.
Runway = Cash on Hand ÷ Monthly BurnS
SAFE Note
An investment instrument that converts to equity later (often before a priced round).
SaaS — Software as a Service
Software delivered over the internet, typically sold via subscription.
Seed Round
The first formal outside funding round, typically used for MVP and early traction.
Series A / B / C
Successive funding rounds aligned to growth stages (early scale, expansion, late scale).
T
TAM / SAM / SOM
Market sizing framework: TAM (total), SAM (serviceable), SOM (obtainable).
Term Sheet
A non-binding document outlining the major terms of an investment.
U
Unicorn
A startup with a valuation over $1B.
V
Valley of Death
The dangerous phase after launch when costs are high and revenue is not yet sufficient.
Valuation
The estimated worth of the company, often negotiated in funding rounds.
Venture Capital (VC)
Institutional investment for high-growth startups, typically in exchange for equity.
Vesting
The process of earning equity over time (common for employees and founders).
Z
Zombie Startup
A startup still operating but not meaningfully growing.