As first-time founder, you'll find that startups are like any other type of job in only one main way: there's a lot of insider lingo.
Whether you're brand new to startups and entrepreneurship, or you just need to brush up on a few definitions, use this as your quick-reference guide to all the startup jargon you may hear out in the wild.
Accelerator
A program that provides mentorship, funding, and resources to startups, often in exchange for equity, with the goal of accelerating growth over a short, fixed time period.
Acquisition
The process by which one company purchases most or all of another company's shares or assets to take control of that company.
Angel Investor
An individual who provides capital to early-stage startups, typically in exchange for equity, often before venture capital funding.
B2B (Business-to-Business)
A business model where one company sells products or services to other businesses rather than directly to consumers.
Backend Development
The process of working on the server-side of a website or application to ensure it functions correctly.
Benchmark
A standard or reference point used for measuring a startup’s performance, often compared to competitors or industry averages.
Bootstrapping
Building and growing a startup using personal savings or the company’s own revenue, without external investment.
Burn Rate
The rate at which a startup is spending its cash reserves before it starts generating positive cash flow.
Business Model
The framework through which a company creates, delivers, and captures value, including revenue streams and cost structure.
Cap Table (Capitalization Table)
A table that shows the ownership structure of a company, including founders, investors, and how much equity each party holds.
Churn Rate
The percentage of customers who stop using a product or service over a given period, often used as a measure of customer retention.
Customer Acquisition Cost (CAC)
The total cost associated with acquiring a new customer, including marketing and sales expenses, divided by the number of customers acquired.
Debt Financing
Raising capital by borrowing money that must be repaid over time, usually with interest, rather than giving away equity. In startups, this may also be referred to as Venture Debt.
Disruption
When innovation significantly alters or displaces an existing market or industry, often by creating a new way of doing things.
Due Diligence
The thorough investigation or review of a startup’s financials, operations, and market before investment or acquisition.
Early Adopter
A person or business that begins using a new product or service before the general public, providing valuable feedback to the startup.
Equity
Ownership stake in a company, typically represented as shares of stock, given in exchange for capital or other contributions.
Exit
The process by which a founder or investor sells their ownership in the company, often through an acquisition, merger, or initial public offering (IPO).
Freemium
A business model where a product or service is offered for free, but users can pay for premium features or additional services.
Fundraising
The process of seeking capital from investors, which can include friends and family, angel investors, venture capitalists, or institutional investors.
Front-End Development
The process of designing and building the user-facing parts of a website or application.
Full Stack Development
The process of developing both the frontend and backend of applications.
Go-to-Market Strategy
A plan that outlines how a company will promote and sell its product to its target customers, including marketing, sales, and distribution tactics.
Growth Hacking
A marketing strategy focused on rapidly growing the customer base using creative, low-cost, and unconventional methods.
Incubator
A physical space that also provides startups with mentorship, resources, and sometimes funding, usually in the early stages of business development.
Initial Coin Offering (ICO)
A fundraising method where startups sell tokens or cryptocurrency to investors, typically in exchange for established cryptocurrencies like Bitcoin or Ethereum.
Initial Public Offering (IPO)
The first sale of a company’s stock to the public, marking the transition from a private to a publicly traded company.
Intellectual Property (IP)
Legally recognized rights to inventions, designs, or creative works, often protected by patents, trademarks, or copyrights.
Iteration
The process of making small, incremental improvements to a product or service based on feedback or performance data.
Key Performance Indicators (KPIs)
Quantifiable metrics used to measure the success or progress of a startup toward its business objectives.
Lead Investor
The primary investor in a funding round who sets the terms of the investment and often takes a more active role in supporting the startup.
Lean Startup
A methodology that emphasizes building a minimal viable product (MVP), getting customer feedback, and iterating quickly to avoid unnecessary costs.
Lifetime Value (LTV)
The total revenue a company expects to earn from a customer during the entire period they remain a customer.
Liquidity
The ability to convert assets or equity into cash. In startups, this often refers to how easily investors can cash out their equity.
Market Penetration
The extent to which a product or service is used by customers in a given market compared to the total potential market.
Market Validation
The process of confirming that there is demand for a startup’s product or service through customer feedback or initial sales.
Minimum Viable Product (MVP)
A version of a product with just enough features to attract early adopters and validate the product idea with minimal investment.
Network Effects
The phenomenon where the value of a product or service increases as more people use it, common in platforms and marketplaces.
Non-Disclosure Agreement (NDA)
A legal contract in which one or both parties agree to keep certain information confidential.
Option Pool
A percentage of a startup’s equity set aside for future employees or advisors, typically as part of their compensation.
Pivot
A significant shift in a startup’s business model or product focus in response to market feedback or challenges.
Post-Money Valuation
The valuation of a company after new capital is invested, reflecting the value of the company plus the new investment.
Pre-Money Valuation
The value of a startup before it receives new investment or funding, typically used to calculate how much equity will be exchanged for capital.
Product-Market Fit
The point at which a startup’s product or service meets the demands of a strong market, often indicated by growing sales or high customer retention.
Pro Forma
Financial statements that project a company’s future financial performance based on certain assumptions or forecasts.
Revenue Model
The strategy a company uses to generate income, including product sales, subscriptions, or other forms of monetization.
Runway
The amount of time a startup can continue operating before it runs out of cash, calculated by dividing cash reserves by the monthly burn rate.
SaaS (Software as a Service)
A software delivery model where applications are hosted in the cloud and accessed over the internet, usually on a subscription basis.
Scaling
The process of growing a startup’s operations, revenue, or customer base rapidly without significantly increasing costs.
Seed Funding
The initial capital raised by a startup to fund early development, often from angel investors, friends and family, or seed venture capital firms.
Series A, B, C Funding
Successive rounds of venture capital financing, with Series A typically being the first major round after seed funding, followed by Series B and Series C as the startup grows.
Silent Partner
An investor who provides capital but does not take an active role in the business’s day-to-day operations or management.
Software Developer
A professional who designs, creates, and maintains software for applications and systems. May also be referred to as a software engineer.
Stock Options
A benefit often given to employees, allowing them to purchase company stock at a set price after a certain period of time.
Sweat Equity
Equity earned through hard work and time invested in building a startup, as opposed to financial investment.
Target Market
The specific group of customers that a company aims to serve with its products or services.
Term Sheet
A non-binding agreement outlining the terms of an investment deal between a startup and an investor, typically including details on valuation, equity, and governance.
Traction
The progress or momentum a startup has gained, often measured by customer growth, revenue, or other performance indicators.
Unicorn
A privately held startup valued at $1 billion or more.
User Acquisition
The process of attracting new users or customers to a product or service, often through marketing and sales efforts.
User Experience (UX)
The overall experience a person has when interacting with a product or service, encompassing design, usability, and customer satisfaction.
Valuation
The estimated value of a startup, often used to determine how much equity to give up in exchange for investment.
Venture Capital
A form of financing provided to early-stage startups with high growth potential in exchange for equity.
Vesting
The process by which employees or founders earn equity in a company over a period of time.
