Startup Glossary: 45 Commonly-Used Startup Terms You Need to Know

We’ve decided to create a startup glossary—a one-stop shop for all those tricky startup terms and their meanings. As the number of must-know startup words continues to grow, it can be tough for entrepreneurs to keep up. We aim to simplify things by providing clear explanations for popular startup terms commonly used in the startup space.

This glossary is a work in progress, and we plan to expand it over time. So, without further ado, here’s a growing list of commonly used startup terms, presented in alphabetical order. We hope you find it useful on your startup journey!

Accelerator

Startup accelerators are programs designed to help early-stage startups grow quickly. These programs offer resources like funding, mentorship, and networking opportunities to selected startups over a fixed period, usually several months. The goal is to support startups in scaling their business and increasing their chances of success. In exchange for these resources, accelerators typically take a small equity stake in the startups. Overall, accelerators play a crucial role in the startup ecosystem by providing valuable support to emerging companies.

Angel Investor

Angel investors are typically high-net-worth individuals who provide financial backing to early-stage startups in exchange for ownership equity. They often play a crucial role in the startup ecosystem by offering not just capital but also mentorship and industry connections.

B2B (Business-to-Business)

B2B refers to a type of commerce where businesses sell products or services to other businesses rather than individual consumers. This often involves longer sales cycles, larger transaction sizes, and a focus on building relationships with key stakeholders.

B2C (Business-to-Consumer)

B2C is a type of commerce where businesses sell products or services directly to individual consumers. This typically involves marketing efforts aimed at a broader audience and transactions conducted through retail or online channels.

Board of Directors

The board of directors is a group of individuals elected by shareholders to oversee the management and strategic direction of a company. They provide guidance and governance oversight, making key decisions on behalf of the company and its stakeholders.

Bootstrapping

Bootstrapping is the practice of funding a startup’s development and growth using personal finances, revenue generated by the business, or minimal external capital. It requires a frugal approach to resource allocation and a focus on achieving sustainable growth.

Burn Rate

Burn rate refers to the rate at which a startup consumes its available cash resources, typically measured on a monthly basis. It’s an important metric for assessing financial sustainability and ensuring that the startup can operate long enough to reach profitability or secure additional funding.

Business Model Canvas

The business model canvas is a visual tool used by startups to describe, analyze, and iterate on their core business model. It encompasses key elements such as value proposition, customer segments, revenue streams, and cost structure, helping startups clarify their strategy and value proposition.

Churn Rate

Churn rate is the rate at which customers or subscribers cancel or stop using a product or service over a given period. It’s a critical metric for subscription-based businesses, indicating customer satisfaction and retention levels.

Convertible Note

A convertible note is a form of short-term debt that can be converted into equity in a startup at a future date. It’s commonly used as a financing instrument in early-stage fundraising rounds, providing flexibility for both investors and founders.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the average cost incurred by a startup to acquire a new customer, including expenses related to marketing, sales, and customer support. It’s an important metric for assessing the efficiency and scalability of customer acquisition efforts.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is the total revenue expected from a customer over the entire duration of their relationship with a company. It takes into account repeat purchases, referrals, and other forms of customer engagement, helping companies understand the long-term value of their customer base.

Disruptive Technology

Disruptive technology refers to a groundbreaking innovation or technology that fundamentally transforms an industry or market. It often leads to the displacement of established players or business models, creating new opportunities for startups to enter and succeed in the market.

Due Diligence

Due diligence is the process of conducting comprehensive research and analysis on a startup to assess its financial, legal, and operational health. It’s typically undertaken by investors before making an investment decision, helping them mitigate risks and make informed investment choices.

Elevator Pitch

An elevator pitch is a concise and compelling summary of a startup’s business idea, intended to capture the interest of potential investors or partners in the time it takes to ride an elevator. It’s a crucial tool for entrepreneurs to effectively communicate their value proposition and generate interest in their venture.

Equity

Equity refers to ownership stake in a startup or company, representing a portion of its value and entitling the holder to a share of its profits and voting rights. It’s often distributed among founders, employees, and investors as a form of compensation and incentive alignment.

Exit

An exit is the process by which founders, investors, or shareholders realize a return on their investment in a startup. It typically occurs through an acquisition, initial public offering (IPO), or other liquidity event, providing an opportunity for stakeholders to cash out their investment and realize gains.

Exit Strategy

An exit strategy is a plan devised by startup founders to cash out their investment in the company. It typically involves a merger, acquisition, or initial public offering (IPO), providing a path for founders and investors to realize returns on their investment and transition out of the company.

Founder

A founder is an individual who establishes a startup, often taking on significant responsibility for its vision, strategy, and day-to-day operations. Founders play a critical role in shaping the culture and direction of the company, driving innovation and growth.

Freemium

Freemium is a business model where a basic version of a product or service is offered for free, with premium features or content available for purchase or subscription. It allows startups to attract a large user base while monetizing a subset of users who are willing to pay for additional value.

Go-to-Market Strategy

A go-to-market strategy is a plan outlining how a startup will introduce its product or service to target customers. It includes marketing, sales, and distribution channels, as well as tactics for customer acquisition and retention.

Growth Hacking

Growth hacking is a marketing technique focused on rapid experimentation and unconventional strategies to achieve rapid user acquisition and business growth. It often involves leveraging data, technology, and creativity to identify scalable growth opportunities.

Incubator

An incubator is an organization or facility that offers workspace, support services, and mentorship to early-stage startups. It provides resources and guidance to help startups accelerate their growth and increase their chances of success.

Intellectual Property (IP)

Intellectual Property (IP) refers to legal rights associated with intangible assets created by a startup, such as patents, trademarks, copyrights, and trade secrets. Protecting IP is crucial for startups to maintain their competitive advantage and prevent unauthorized use or infringement.

KPI (Key Performance Indicator)

A Key Performance Indicator (KPI) is a measurable value used to evaluate the success or performance of a startup in achieving its objectives. KPIs are often aligned with strategic goals and help startups track progress and make data-driven decisions.

Lean Startup

The Lean Startup is a methodology for building and scaling startups that emphasizes rapid iteration, continuous testing of assumptions, and a focus on delivering value to customers efficiently. It helps startups minimize waste and maximize learning through validated learning and experimentation.

Lead Investor

A lead investor is an investor who takes the primary role in negotiating and structuring an investment round in a startup. They often provide credibility and signaling to other investors, helping to attract additional funding and support for the startup.

Minimum Viable Product (MVP)

The Minimum Viable Product (MVP) is the simplest version of a product that allows a startup to test its core hypotheses and gauge market demand before investing further resources in development. MVPs help startups validate their ideas and iterate based on real user feedback.

Pitch Deck

A pitch deck is a presentation used by founders to pitch their startups to potential investors. It typically includes slides that outline the problem, solution, market opportunity, business model, team, and financial projections, aiming to generate interest and secure funding.

Pivot

A pivot is a strategic redirection or adjustment made by a startup in response to feedback or changing market conditions. It’s aimed at improving product-market fit or addressing new opportunities, allowing startups to adapt and evolve their business strategy.

Product-Market Fit

Product-market fit is the degree to which a product or service satisfies the needs and demands of a specific market segment. It indicates the potential for success and growth, helping startups focus their efforts on areas with the highest market potential.

ROI (Return on Investment)

Return on Investment (ROI) is a financial metric used to evaluate the profitability of an investment relative to its cost. It’s calculated as the ratio of net profit to the initial investment, expressed as a percentage, and helps investors assess the efficiency of their capital allocation.

Run Rate

Run rate is an estimate of a startup’s future financial performance based on its current revenue and expenses over a certain period. It’s typically extrapolated to an annual figure and used to forecast growth and profitability, providing insights into the company’s financial health and trajectory.

Runway

Runway is the length of time a startup can sustain its operations before exhausting its available funding. It’s often calculated based on the burn rate and remaining cash reserves, helping startups plan and manage their runway to avoid running out of funds prematurely.

Scalability

Scalability is the ability of a startup to grow its business without a proportional increase in resources, such as personnel or infrastructure. It’s a key consideration for startups aiming for rapid growth and expansion, allowing them to scale efficiently and sustainably.

Scrum

Scrum is a framework within Agile development for managing complex projects. It involves small, self-organizing teams that work in short, fixed-length iterations called sprints, focusing on delivering incremental value and adapting to changing requirements.

Seed Funding

Seed funding is initial capital provided to a startup to support its early development and operations. It’s typically obtained from angel investors, friends, family, or incubators, and helps startups validate their ideas and achieve key milestones in preparation for future fundraising rounds.

Seed Round

The seed round is the initial round of financing for a startup, typically involving angel investors, venture capital firms, or seed-stage funds. It provides capital to support early development and market validation, laying the foundation for future growth and fundraising efforts.

Series A/B/C Funding

Series A, B, and C funding are successive rounds of investment secured by a startup after the initial seed funding. Each round typically involves larger amounts of capital and is often led by venture capital firms, providing the startup with resources to scale and expand its operations.

Series D/E/F Funding

Series D, E, and F funding are subsequent rounds of financing beyond Series C funding. They are often pursued by startups as they scale and expand their operations, with the aim of raising larger amounts of capital to support growth and achieve strategic objectives.

Startup

A startup is a young company founded by one or more entrepreneurs to develop a unique product or service and bring it to market. Startups are characterized by innovation, agility, and a focus on growth, often operating in fast-paced and dynamic environments.


TOP