The Startup Glossary: Every Startup Term You Need to Know
The startup world is filled with fancy terms, near-indiscipherable slang, and some critical words that any entrepreneur simply needs to know. To help make sense of the madness, we've created a Startup Glossary with all of the most important startup-related terms.
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A/B Test - Categorizing users into different groups and seeing how each group’s experience differs. AARRR - Startup success model that fuses acquisition, activation, retention, referrals, and revenue as data points. Above Ground Risk - The risk of political, social, or cultural factors influencing business. Above Market Cost - How much more expensive a product is versus alternatives. Absolute Advantage - Producing a good with less input. Academics - Credentialed professionals who provide research. Accelerated Vesting - A form of vesting that manifests more quickly than strategized in a company’s stock option plan. This allows individuals to receive monetary benefits from their options earlier. Accelerator - Fixed-term programs that provide mentorship, valuable advice, and training for entrepreneurs. Oftentimes, these programs culminate in a pitch event. Accounts Payable (AP) - The amount of money a company owes to suppliers or creditors after services or supplies have been delivered and used. Accounts Receivable (AR) - Amount of money owed by customers after a product has been delivered. Accredited Investor - An individual who meets the legal requirements for investment in a business venture. Accrual Basis - A type of accounting that reports income when earned and expenses when spent. Companies are responsible for accurately recognizing their own income and expenses. Accrued Interest - The interest accrued on a debt or asset since the most recent interest payment was made. Acquiescence Bias - Bias for people to agree with a statement when in doubt. Acquired Knowledge - Information outside of a company that can be purchased or hired. Acquisition - The action of taking a controlling interest (50% or more) in a company. Actionable Metric - Data that links actions to results, allowing companies to act upon that data. Activation - TThe process of an individual becoming aware of a brand. Active Buyer - Customer whose most recent purchase was made in the last 12 months. Active Users - Measurable amount of users taking action on a product or platform. Ad Hoc - A project or initiative created for the purpose of solving a specific problem. Addressable Market - The total possible market of a product. Advertising to Sales Ratio - A metric used to measure the effectiveness of an advertising campaign, conducted by comparing the amount spent on advertizing to the increase in sales. Advisor Agreement - A document that outlines an advisor’s commitment to a company and sometimes grants him/her a small amount of equity. Advisory Board - A group of external advisors who provide strategic advice. Affiliate Marketing - A sales method wherein companies present their products to other individuals or companies who will sell the company’s products for a commission. Agile Methodology - A strategic approach, often used in software development, building products via a series of incremental development sprints. This approach helps teams respond to the inherent unpredictability of product development. Alligator Arms - A state in which someone is unwilling to reach outside their comfort zone. Alpha Test - Controlled internal testing of a pre-production model, intended to detect design flaws or functionality deficiencies. Always Be Closing (ABC) - A phrase used in retail describing a sales strategy wherein the salesperson is constantly seeking new customers and cutting through small talk. Amortization - The scheduled process of gradually paying off a debt. Analysis Paralysis - The state of having too much data to make a decision. Analytics - A broad word used to describe all of the tools used to track user behavior. Angel Fund - A group of angel investors who work together and coordinate in the investment process. Angel Investor - Individual who provides capital for startups in exchange for either debt or equity. Angel Round - Funding round dedicated to attracting angel investors. Anthropomorphization - A research tactic where users are asked to describe a product or brand in terms of human personality traits. Anti-Dilution Agreement - A legal agreement ensuring that if further investments are made into a company or a sale occurs, the investor’s shares are not diluted. This is primarily performed to protect the interests of early investors. Apportunity - Opportunity to improve an app or turn it into something more desireable. Archetype - An unconsciously inherited and ever-present idea or notion. Association Technique - A research tactic where users are asked which words come to mind when they think of a certain product. Average Order Volume (AOV) - Measures the size of each product order. Average Revenue Per User (ARPU) - Total revenue divided by number of users. Average Size of Sale - The average dollar amount brought in by each individual sales contract. B Corporation - A for-profit business dedicated to addressing social and environmental issues. Back Checking - Calling a previously interviewed customer and asking about their experience in that interview. Back of the Napkin Model - A brief business model designed to fit on the back of a napkin. Backlink - Incoming links to a website or a particular web page. Balance Sheet - A document that details a company’s assets, revenue, and expenses. Banner Ad - Online advertising tactic wherein an advertisement is embedded in a web page. Bayesian Statistic - Probability calculated by a combination of prior knowledge and accumulated experience. Benchmark - The metric used by a company to gauge their success. Beta Test - External pilot-test after Alpha testing is complete and prior to commercial production. In beta testing, the product is released to a limited number of customers for testing under normal, everyday conditions in order to detect any flaws. Big Beast - Someone who is incredibly knowledgeable and considered an expert in their field. Blue Chip - Large, established, successful company occupying a space. Board of Directors - A group of individuals who have been elected by stockholders and chosen to oversee a company’s affairs. Oftentimes, investors request a board seat in exchange for a startup investment. Boilerplate - An organization’s standard description that is used repetitively. Oftentimes, boilerplates are placed at the bottom of email correspondence. Boiling the Ocean - Phrase that describes an idea that is either too broad or trying to achieve too much. Bookings - A contract between a company and a customer, where the customer agrees to pay the company for a product or service. Bootstrapping - Starting a business without external help or investment. Bottom Line - A comparison of net income versus net expenses, resulting in net profit. The word “bottom” refers to the fact that the net profit often appears at the bottom of financial reports. Also referred to as Net Income or Net Profit. Braindrawing - A type of visual brainstorming where a group of people sketches ideas for designs and visual concepts. Brainwriting - Method to quickly brainstorm by having a group of people write down their ideas and share them anonymously. Brand Activation - Integration of all available communication streams in order to activate consumers and generate brand recognition. Brand Architecture - The “family tree” of a company, detailing the different brands controlled by a company and their relationships. Brand Equity - A brand’s power, derived from name recognition and reputation, that has been earned over time. Brands with high equity often generate higher sales and relatively increased profit margins. Brand Experience - A brand’s reputation as perceived by an individual. Brand Extension - The launching of a new product in a new market area under an established brand from a different market. Brand Identity - The intended customer perception of a brand, orchestrated via name, logo, practices, and communication style. Brand Image - The bundle of associations, within a customer’s mind, between a brand and the rest of the world. Brand Licensing - The act of allowing a manufacturer to produce and sell products under a particular brand name in return for a percentage of the sales profit. Brand Narrative - The story of a brand’s ideas, origins, and experiences as they relate to customers. Brand Personality - The attribution of human traits or personality to a brand in order to achieve differentiation and authenticity. Brand Strategy - The details of to whom a brand intends to appeal and how this will be achieved. Break-Even Point - The amount of revenue that will cover all of a company’s operating costs. Bridge Financing - Short-term financing that is expected to be repaid quickly. Build-Measure-Learn - The feedback loop used to continually research and improve a product. Burn Rate - The rate at which cash is decreasing. Business Model Canvas - A map that allows companies design, develop, pivot, and plan its course. Business Plan - A document describing how a company will reach its goals. Business to Business (B2B) - A company that provides services for other companies. Business to Consumer (B2C) - A company that provides services for individuals. Buy-and-Sell Agreement - A document specifying what will happen if one of the co-owners of a company leaves for any reason. Buyout - A common exit strategy in which a company’s shares are purchased, granting the purchaser a controlling interest in the company. C Corporation - The most basic form of corporations, any newly incorporated entity is automatically assumed to be a C Corporation unless otherwise specified. The key characteristic of a C Corporation is that it is legally viewed as an individual entity, separate from its shareholding owners. Call-to-Action - Text or image that urges users to do something, whether it be attending an event or signing up for a beta. Capital - Cash, goods, and assets at one’s disposal. Capital Expenditures (CapEx) - Any items purchased by a company with the expectation of future benefits. Capital Gain - The difference between the purchase price and selling price of a given asset. Capital Under Management - The amount of capital available to a management team for venture capital investment. Capitalization Table - A table displaying the total amount of securities issued by a company, along with details of the ownership of these securities. Capped Notes - This refers to the practice during investment rounds where a cap is placed on a company’s valuation. Carried Interest or "Carry" - The portion of investment gains to which fund managers are entitled without contributing their own capital. Cash Basis - Type of accounting that reports all revenue and expenditures when payments are sent. This form of accounting is optimal for startups and companies with small inventories. Cash Flow - Net amount of cash moving into and out of a business. Positive cash flow indicates that a company’s liquid assets are increasing while negative cash flow indicates the opposite. Challenger Brainstorm - A brainstorm method where a group lists all of their assumptions and attempt to invalidate them. Chicken and Egg Dilemma - Situation where users are necessary to create content in order to attract more users. Churn - A general term for any quantifiable loss. This can be attached to customers, cohorts, or revenue in order to measure the retracting of business. Churn Rate - Percentage of customers who stop subscribing to a service. Click Through Landing Page - A landing page with the goal of sending a user forward to another page. Click Through Rate (CTR) - The amount of users who click a certain link compared to the amount of users who visit the page on which the link resides. This is often expressed as a percentage. Client/Customers - The person or group of people who are the direct beneficiary of a particular product or service. Ideally, these are the people for whom the product is designed. Cliff - A term describing the length of time before a founder or stock recipient becomes partially vested in their restricted stock or stock options. Cliff Vesting - The practice by which employees are granted all long-term benefits, stock options, or retirement funds at a single point in time rather than being granted gradually. Closing - The final stage in the investment process, where legal documents are signed and an investment becomes official. Closing Rate - A measurement for sales effectiveness determined by the number of proposals per sale. Co-founder - A joint founder with whom equity is shared. Co-founder Agreement - An agreement detailing the nature, function, and equity split of a company. Cohort - A customer group created due to a unifying trend or factor making that group unique. Cohort Analysis - Attempting to identify trends by breaking up users into different experimental groups. Competitive Analysis - Identifying competitors and recognizing their strengths and weaknesses compared to one’s own. Competitive Matrix - A tool that compares one’s product to a competitor's. Concierge Minimum Viable Product (CMVP) - A manual service simulating the same exact steps people would go through with a final product. Constraints - Limitations outside the control of a project team. For example, date time-line limits, or finite resources. Content Marketing - A marketing approach based on the creation and distribution of valuable and relevant content for potential customers to digest. Conversion Funnel - An individual’s journey to discovering a product and becoming a customer. Conversion Rate - The ratio of closed deals and secured customers compared to the amount of prospective customers at various stages of the funnel. Conversion Rate Optimization (CRO) - Changing a landing page or website to drive traffic and make users inclined to stay. Convertible Debt/Equity - Investments designed to turn into equity at a future point in time, when a company is first valued. This is a useful method for young companies to attract investment prior to valuation. Cost of Goods Sold (COGS) - The expense required to produce the goods sold by a company. Oftentimes, this means the cost of raw materials plus the cost of labor. Cost Per Action (CPA) Marketing - Online advertising pricing strategy in which payment is based upon the effective results of that advertisement, oftentimes measured in sales or registration numbers. Cost Per Thousand (CPM) - A standard measurement for the cost of advertisements, measured by cost of advertisements per 1,000 created impressions. Cost Structure - An analysis of the costs of business expenses versus the necessity of these expenses. Creative Intelligence - Ability to reach creative solutions by framing problems in new ways. Credit - An accounting entry that either decreases total assets or increases liability. Cross-Elasticity - Consumer behavior that proves which products are substitutes for each other. Crowdfunding - The process of generating money to fund a business via many individual donors across an online platform. Current Assets (CA) - Assets that will be used within one year. Current Liabilities - Debts that are payable within one year. Customer Acquisition Cost (CAC) - The full cost required to acquire a customer. Customer Archetype - A “typical customer” for a company to establish its intended audience. Customer Life Cycle - The steps a customer goes through when using a product. Customer Relations Management (CRM) - Practices and strategies to analyze customer interactions with the ultimate goal of improving business relations and achieving customer satisfaction. Customer Retention - Practices a company engages in to retain customers. Customer Segments - A breakdown of a product’s value for various sets of customers. Daily Active Users (DAU) - The amount of users of a service or product in a 24 hour period. Data Mining - Querying large sets of data for precise analysis. Deal Flow - The rate at which investment opportunities are introduced to a funding institution. Deal Room - Central location where investment pitches and negotiations take place. Debit - An accounting entry that increases assets or reduces liability. Debt - Loans that must be repaid over time. Debt Financing - Money-raising tactic in which a company sells bonds or notes to an investor with the assumption that they will be re-purchased with interest. Deepness - A measurement of how much value an idea can ultimately deliver. Deliverable - A tangible outcome produced by a project. Internal deliverables are created by a project and are used by the company itself. External deliverables are created for clients, stakeholders, or customers. A single project can create many sets of deliverables. Deployment - Introduction of a new activity, procedure, or program to an organization. Design Thinking - Creative problem-solving by immersion in customer experience and analyzing their interactions with a product. Dilution - The process by which founders of a company slowly lose their equity/ownership. Direct Marketing - A form of advertising featuring physical items for customers in order to communicate information about a product and create a lasting impression. Disclosure Documents - A series of documents prepared by prospective investors and acquirers. These documents include compliance requirements and the details of a given investment or acquisition. Discoverability - How people will learn about a product. Disruptive - The creation of a new market that overcomes an existing one. Dogfooding - A company showing confidence in their own product by using it themselves. Derived from the expression “eating your own dog food.” Domain Name - A unique name identifying a website. Double Entry - A form of accounting where each entry requires a corresponding entry in a different account. This is done in order to ensure that no errors occur and no expenditure or revenue goes missing. Drip Campaign - Marketing method designed to attract customers through repetitive marketing actions and advertisements. Due Diligence - An analysis made by an investor based on the facts and information about a company or product prior to investment. E-commerce - Any transaction that involves the transfer of information across the internet. Early Adopter - Individual or business who discovers and uses a product before others. Early Majority - First sizeable segment or customer group to adopt a new product. Early Stage - The earliest stage of the three main startup phases. These are fledgling companies that are often pre-valuation. Ecopreneur - Entrepreneur who focuses on environmentally friendly products. Elastic - When a small change in price leads to a large change in demand. Email Alias - An email address linked with a different destination email address. Embargo - An agreement to provide a particular press agency with a story but delay publication of that story. Employment Terms - Legal document detailing the specific requirements and benefits of employment. Entrepreneur in Residence (EIR) - An experienced entrepreneur who is employed by a venture capital firm and plays an advisory role. Equity - A broad word used to describe the ownership of a company. It can be measured in stock or other units based on a company’s structure. Equity Financing - Money-raising tactic where investment is provided in exchange for a portion of ownership over the company. Equity Grants - Equity rewards, often in the form of stock, given to key employees. Oftentimes, there is a waiting period before employees can legally claim this equity. Exit - The point at which an investor sells their stake in a business to fully realize gains or losses. Generally, exit details are planned at the time of the original investment. Expenses - Costs that a business incurs from all sources. Exploding Offer - An investment offer that is retracted if it not accepted after a short time period. Failing Forward - Learning from failures and using them to build a more successful product. Financial Model - An abstract - and often quantitative - representation of a real financial situation, used to represent a business’s portfolio or project. Finder's Fee - The amount paid to a third-party for introducing a company to investors or acquirers. Oftentimes, a finder’s fee is dependent upon an investment or acquisition being made. First Mover Advantage - Advantage gained by being the first company in a particular market space. First Refusal - Clause that requires investors and founders to offer their shares to an existing early investor before selling to a third party. Fixed Assets (FA) - Long-term assets that benefit companies for longer than one year. Fixed Costs - A cost that does not change with increases or decreases in volume of sales. Forecasting - A planning tool designed to eliminate uncertainty over the future, relying upon past data to reveal persistent trends. Founder - Entrepreneurs who have started a venture. Freemium - Free service with paid features. Full-Ratchet - A provision intended to protect investors, preventing extreme dilution of equity/shares. Functional Manager - The individual to whom another employee reports within a company. Functional Requirements - Particular behavior or metric to judge the operation of a system. Fund of Funds - A mutual fund that invests into other mutual funds. Future Value - The possible value of an asset in the future.
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Gamification - Adding game elements to a non-game service in an attempt to increase engagement. Gantt Chart - A bar chart depicting activities for a given day, used for day-to-day scheduling. General Ledger - A comprehensive and complete record of all financial transactions spanning the lifetime of a company. Generally Accepted Accounting Principles (GAAP) - An established set of rules created by the accounting industry which must be followed when reporting financial information. Generation Stage - The stage of creating ideas. Go-to-Market Strategy - A company’s plan to gain market share. Going Private - When a company transitions from public to private through a series of transactions in which either the company itself or a private investor (re)purchases its stock from the public. Golden Handcuffs - Benefits or delayed payments offered by a company in order to prevent an employee’s departure. Golden Parachute - A large compensation or lump payment for the dismissal of an executive, often occurring in the aftermath of a takeover. Greenfield - A market area with no restraints or previous solution attempts. Gross Margin - A percentage metric for how much revenue a company keeps after subtracting the cost of all production-related expenses. Higher percentages are generally better.A percentage metric for how much revenue a company keeps after subtracting the cost of all production-related expenses. Higher percentages are generally better. Gross Profit - A measure of the profitability of a revenue stream. This statistic is essentially all revenue generated by a product subtracted by the cost of production, support, and delivery. Ground Floor - Earliest possible startup phase. Groupthink - Consensus of opinion without critical reasoning. This is to be avoided at all costs, as it damages creativity and idea generation. Growth Hacker - An employee who creates viral results quickly. Growth Hacking - Coined by Sean Ellis, this term refers to the art of generating fast attention and customer base growth via unconventional means. Hard Sell - A pitch style designed to get a consumer to purchase a product in the short-term, without allowing the consumer time to wait and analyze alternatives. Hashtag - A tag or phrase preceded by a hashmark (#) in order to establish a keyword or topic of discussion. Herd Mentality - The phenomenon of individuals following a leader rather than thinking independently. Hockey Stick - The informal term for a upward growth trend. Holding Company - An entity created for the sole purpose of holding assets with few other functions. Hourly Active Users (HAU) - The amount of users of a service or product in a 60 minute period. Hybrid Viral Model - Supplementing customers gained by viral campaigns with customer acquisition through other means, like paid search or SEO. Ideation - The creative process of generating, developing, and communicating ideas. (see also: Generation Stage) Impressions - Metric to determine the amount of newly generated users as a result of a particular advertisement. In-App Purchases - Sales coming from current users via an application. Income Statement - Sales, expenses, and net profit over a particular period of time Incorporation - The act of legally forming a company. Incubator - A company or facility designed to aid entrepreneurs via shared resources, education, expertise, and intellectual capital. Indication of Interest (IoI) - A potential customer displaying interest in a product. Inelastic - When a change in price does not lead to a large change in demand. Influence Marketing - Identifies the individuals or organizations who have influence over potential buyers and attempts to market towards those influencers. Initial Public Offering (IPO) - A corporation’s first sale of securities, often in stock form, under the regulations of a public company. Innovation - Successful introduction of a new change that adds value. Innovator - An individual who introduces valuable changes. Integrative Thinking - Problem-solving method that focuses on defining the relationship between two variable and determining causality. Intellectual Property (IP) - The legal ownership of ideas or concepts. These are intangible assets, which have the potential to be far more important than any tangible assets. Intrapreneur - Someone who practices entrepreneurship within a large company. Invention - The creation of new forms. An idea that has become a reality. Investor Rights Agreement (IRA) - A legal document which is often introduced by venture capital firms or prospective investors while a company is seeking investment. These agreements are often designed to protect the interests of investors. Iteration - Each phase of agile development is referred to as an iteration. Iterations are short time frames granted to deliver sets of features. Each iteration generally contains activities such as analysis, design, development, and testing. Joint Venture - An arrangement, partnership or investment among a group of individuals or entities spanning a limited time period with the purpose of achieving a specific objective. Jumping the Shark - The point in time when a brand’s evolution begins to decline. Key Employee - A co-founder or early employee who is a key to a company’s success. These employees are often rewarded with equity. Key Performance Indicators (KPI) - The metrics a company tracks to measure progress or success. Laggards - A segment of a target market who are hesitant to adopt a new product. Late Majority - The last major customer segment to adopt a product. Late Stage - A startup company that has been in existence for a noteworthy period of time and has proven to have a viable product and business model. Lead Generation - The process of attracting potential customers and capturing interest in a given product with the intention of developing the sales pipeline. Lead Generation Landing Page - Landing page that is used to capture user information and enter potential customers in the pipeline. Lead Investor - Member of an investment syndicate who holds the largest stake in a given company. Oftentimes, the lead investor is a startup’s principal provider of capital. Leads - A prospective customer who has provided their contact information to a company. Leaky Bucket - An analogy used to explain how products lose customers. Letter of Intent (LOI) - A business document outlining the terms of a deal, often between two separate companies. Leveraged Buyout - When a person or group of people take on debt in order to buy out the remaining shares of a company and achieve ownership. Liabilities - The debts and financial obligations of a company. Liability - The state of being legally responsible for something. (see How to Win Friends and Influence Bankers) Licensing - A business agreement wherein one company grants another company permission to manufacture its product for an agreed payment. Lifestyle Business - Company that runs itself and makes a profit, but will never grow into something gigantic. Lifetime Value of Customer (LTV) - Net profit a single customer will provide to the business. Limited Liability Company (LLC) - A company structure preventing individual members of the company from being held personally responsible for the company’s debts or liabilities. Limited Liability Partnership (LLP) - A partnership structure allowing partners to carry limited liability in order to mitigate risks. Limited Partner (LP) - An investor with little control over the management of a partnership or a portfolio company, in exchange for less restrictions on liquidation. Liquidation - The process of turning securities into cash, often as part of an exit strategy. Liquidation Preference - The right to receive a specific monetary value in exchange for equity, especially in the event of a company dissolving. Liquidity Event - An event that allows venture capital firms realize their gains or losses by liquidating equity in a company. Logo - A graphic design logo associated with a company or product. This often contains a name, trademark, or representative symbol. Long Term Liabilities - Debts payable over a period of time exceeding one year. Loss Leader Pricing - Selling a product at a loss in order to build a customer base. Low Hanging FruitLow Hanging Fruit - Task with a large positive potential with few drawbacks. In the context of startup ideation, this means an idea which is in a market area where competition is low.
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Net Promoter - Customers who are likely to recommend a product to others. Net Sales - The amount of sales generated by a company after deducting returns, damaged, and missing products. Network Effect - The power of a user to positively impact a product via contribution Obviousness - Clarity that everyone should be using a given product. Onboard - Reaching out to new customers in an attempt to establish brand loyalty. Onboarding - The process through which new employees acquire necessary knowledge, behaviors and skills in order to become effective members of the company Open Rate - A percentage measuring how many successfully delivered advertisements were opened by subscribers. Operating Margin - Margin ratio measuring a company’s pricing strategy and operational effeciency. Overhang - Term describing the event when an investor’s liquidation preferences exceed the company’s current value. Pages Per Visit - A measurement determined by dividing page views by visits, which allows companies to see how many pages an individual can be expected to view in a given visit. Paper Prototype - A type of usability testing where a user performs realistic tasks by interacting with a manual, early-stage version of the interface that is often manipulated by an individual who is upholding the illusion of computer interactivity. During this process, the details of how the interface is supposed to be used are withheld from the user. Pay Per Click (PPC) - Internet advertising model in which the advertising company pays the company who hosts the advertisement based on how many users click a particular link. Persona - Fictional, generalized representations of ideal customers. These are intended to be easily remembered in order to ensure that the company does not forget the people for whom their products are made. Piecemeal Minimum Viable Product (PMVP) - A functioning model of a product that takes advantage of existing tools and services in order to emulate the user experience process. Pilot Operation - A small-scale test to gauge the potential for a complete product. Pipeline Value - The value of all sales opportunities existing within a funnel. Pivot - To change the direction of a project, or pursue a different strategy. Positioning - The way in which a company differentiates itself from competitors. Positioning Statement - An detailed expression of the way a brand, company, or product fills customers’ needs Post-Money Valuation - The value of a company, determined after an investment has been made. Pre-Accelerator - Program that offers advice for companies that have not yet entered an accelerator. Pre-Emptive Right - A clause in an investment agreement that grants investors the right to maintain the same percentage of equity after restructuring. Pre-Money Valuation - The value of a company, determined before an investment has been made. Pre-Sales - A product for which customers have dedicated money and made purchases before the product has actually been shipped. Sometimes, pre-sales take place before products have been produced or finalized. Preferred Stock - A stock that carries a fixed dividend and takes sale-order priority over other forms of stock. Present Value - The current value of a future sum of money, as that money could be more effective in the short-term. Press Release - A public relations announcement sent to the news media in order to let the media know of company developments or decisions. Price Point - The suggested retail price of a product, often designed to be competitive with the price of alternatives. Price to Sales Ratio - A ratio comparing a business’ market capitalization with its revenue. Primary Domain Name - The first domain name that has been mapped to a particular hosting account. Principal - The total value of the original sum invested. Private Equity - Investments in private companies whose equity is not publicly traded. Pro-Rata - Division of stocks or equity based on equal proportions. Product/Market Fit - The extent to which a product satisfies a market demand. Production Environment - A term describing the setting where a product is put into use by customers on a regular basis. Profit and Loss (P&L) - A financial statement summarizing a company’s revenue, expenses, and profit during a particular period with the intention of indicating a company’s performance. Project Team - The individuals assigned to work on a given project. They are held responsible for understanding the work required and executing upon this knowledge. Promissory Note - A legal document detailing the amount of debt owed along with an obligatory repayment plan. Prototype - Early stage product that tests if a concept is scalable. Public Relations - The communication strategy that builds a relationship between a company and the public. Purchase Funnel - A model for the steps an individual goes through before decided to use a product and become a customer. Purchase Pretzel - Similar to the Purchase Funnel, but this model takes the inherent complexity of customer decision-making into account Qualifying Opportunities - The process of determining if a particular lead has a specific characteristic that would classify that lead as a member of the target market. Quality Assurance (QA) - The process of determining whether or not a product meets required specifications and customer expectations. Quorum - The minimum acceptable amount of stockholders or directors needed to hold a corporate meeting or vote.
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Ramen Profitable - A company that is profitable enough to cover expenses of all the employees’ basic living requirements. Recapitalization - A corporate reorganization of capital structure by changing the mix of equity and debt. Recurring Revenue - A measurement of revenue streams that are recurring. This excludes one-time fees and professional service fees. Referral Marketing - The spreading of information about a product via existing customers. This process is often incentivized by companies. Registered Users - The number of users registered for a product or service. Release - A functional product sent to customers. Repositioning - Marketing strategy to re-shape a product’s purpose or image in a customer’s mind. Request for Proposal (RFP) - A form of bidding solicitation wherein a company announces the availability of funding for a particular project. This allows other companies to bid upon who will fund this project. Requirements - Descriptions of the qualities, traits, abilities and specifications that a product ought to possess. Response Bias - A set of biases that can undermine self-reported and survey data. Responsive Design - A website design strategy focused on usability across all access platforms and interfaces. Retargeting - A form of marketing in which users who have previously expressed interest in a given product are presented with banner ads about that product on various other web pages. Retention Rate - A metric derived by analyzing the number of customers at the start of a period, the number of customers at the end of a period, and all customers gained during the course of that period. Return on Investment (ROI) - A metric to gauge company performance versus amount of money invested. It is calculated by dividing net profit by the cost of the investment, and is often expressed as a percentage. Revenue - The amount of money generated. Risk Tolerance - The amount of risk that an investor is willing to accept. Roadmap - A strategic plan to create a product or complete a project. A roadmap describes the individual steps required to meet a set of goals or objectives Run Rate - Annual recurring revenue without factoring in churn. S Corporation - A special type of corporation allowing the protection of limited liability, but also enabling direct flow-through of profits and losses. Sales Cycle Time - The average number of days that a potential customer sits in the sales funnel. Sales Draft - Often used in the discussion of sales involving credit cards, a sales draft is a summary document indicating that a cardholder has made a purchase. Sales Funnel Leakage - A term for the amount of potential customers who are eliminated from the sales funnel at different stages. Sales Mix - A term used by company who sell multiple products to gauge the relative amount of sales for each given product type. Sales Mix Variance - The difference between actual purchased quantity per customer and expected sales quantities. Sales per Share - A ratio comparing total sales over a given period to the value of an individual share of the company. Sales Pipeline - The steps a salesperson takes from original contact with a customer to the closing of a sale Sales to Cash Flow Ratio - A ratio comparing a company’s sales of a particular product to its overall cash flow. Sandbox - An environment or location where experimentation is acceptable, without consequences for failure. Scalability - The potential for a product or service to be expanded. Scaleable - A company that can maintain or improve profit margins while sales volume increases. Scheduled Vesting - The schedule by which an employee is granted access to equity. Scope - The boundaries of a given project. Scrum - An iterative product development method, often introduced to manage software development projects. In scrum-based projects, the team is self-directed with no specified project manager and a high level of communication is maintained between team members. Search Engine Marketing (SEM) - Marketing method that focuses on purchasing ads that are prominently featured on search engine results pages. Search Engine Optimization (SEO) - The process of attracting attention to a product or company by increasing visibility on search engines Secondary Public Offering - When a company presents stock for sale to the public after an IPO. Secondary Purchase - The act of purchasing stock from a shareholder rather than from the company itself. Secret Sauce - The factor which gives a company or product a unique competitive advantage. Securities - All types of equity or debt. Seed Round - The first round of financing for a startup. Usually funds raised in the seed round are intended to be spent on producing a prototype or proof of concept. Seed Stage - The stage of a startup where profitability is extremely unlikely and seed funds are required to gain customer insights. Series A - The first major round of venture capital funding wherein preferred stock is issued. Series B/C/D/E - Later rounds where preferred stock is issued. Serviceable Available Market (SAM) - Possible market targeted by a product within geographic or logistical reach. Session Length - The amount of time individuals spend on a given site. Share Consent - A legal clause requiring an investor’s consent in order for a business to sell shares at a later date. Sitcom Startup Idea - A forced startup idea born of desire to create something rather than to solve a real problem. Sitemap - An XML file listing all URLs for a website, allowing search engines to more easily determine useful keywords. Social Entrepreneur - A person who notices a social problem and attempts to bring about social change as a solution. Social Media Monitoring - The process of using social media channels to gauge attitudes and collect information on the public’s perception of a company. Soft Sell - dvertising and sales with subtle language and suggestion Software as a Service (SaaS) - Technological service that is virtually hosted. Specifications - The exact customer needs that must be satisfied by a product in order for that product to be considered a success. Sprint - A set time period during which milestones must be reached and work must be completed and ready for review. Stakeholder - A person or group of people who have an interest or concern with a company. Startup - A company in an early stage of development. Statutory Voting - A voting method for a Board of Directors in which a board member receives 1 vote for each share they own. Stealth Mode - A startup in a phase of secrecy. Steps to Revenue - A revenue roadmap detailing the exact steps a company must take in order to begin generating revenue. Stickiness - User retention rate. Stock Options - The right to sell or purchase stock for a set price during a pre-defined period of time. Stockholder - Individuals or entities who own stock in a corporation. Story Point - A measurement used by scrum teams to determine how much effort is required to achieve a goal. Strategic Investors - Investors who add value to their investments via industry ties or experience. Subdomain Name - A second website with unique content but residing under the Primary Domain Name. Subscription Model - Payment model requiring a monthly or yearly charge in order to fully utilize a product. Sweat Equity - Shares in a company given in exchange for completed work. SWOT - An analysis of a team’s strengths, weaknesses, opportunities, and threats. Syndication - The venture capital practice of each individual investor contributing a small portion of money required to fund a company. Synthesis - Combining different elements to make a united whole. Tag-Along Rights - Agreed stipulation stating that if a founder decides to sell their shares to a buyer, an existing investor can offer their shares to the buyer for the same amount. Target Market Profile - The set of attributes possessed by a target population intended to be buyers of a product. Technical Requirements - A set of technical properties that a product must fulfill. Tentpole - A project whose success uplifts other similar projects. Term Sheet - A non-binding agree designed to provide a layout of the basic terms and conditions of an investment. Term sheets are often used as templates for later legal documents. The One Metric That Matters (OMTM) - A focused, single-metric approach to measure success. Total Available Market (TAM) - All existing market demand for a product. Tractability - A measurement of how hard it will be to launch a functional version 1.0. Traction - Proof that people are buying and using a product. Trade Secret - Protected information within a company that derives independent economic value from its exclusivity. Trend Naming - Analyzing on-going social trends before choosing a name for a new startup Uncapped Notes - A funding practice designed to protect founders. Uncapped notes provide no guarantee that investors will be granted a specific amount of equity per dollar invested. Underwriter - An investment bank with a contractual obligation to take any securities into their own books if the company in which they are vested has failed. Unicorn - A tech company with a value higher than $1bn. Uniform Commercial Code (UCC) - Uniform Commercial Code (UCC) Unique Value Proposition (UVP) - A clear statement that describes the benefit of a product and how a product solves customer needs. Unit Economics - Direct revenue and costs associated with a certain business model expressed on a per unit basis. Unqualified Prospects - A potential client who has not been previously vetted. User Acquisition - The transition of an individual into a user of a product or service. User Experience - The overall experience of an individual using a given product, often discussed in terms of the easiness or difficulties with this experience. Valuation - The process of determining a company’s value. Valuation - The process by which a company’s value is determined. Value Proposition - Quantifiable benefits of a product. Vanity Metrics - Metrics that bolster a company’s self-confidence with few actionable implications. Vaporware - A product that is advertized as being sold while still in prototype or pre-prototype phase. This tactic is often used to gauge interest in a hypothetical product. Variable Costs - The opposite of fixed costs, variable costs fluctuate depending on what a company is producing. Therefore, variable costs are difficult to predict.q Vendor - A supplier required to create a product. Venture - An endeavor involving a degree of risk and reward. Venture Capitalist - An individual investor who works at a venture capital firm and makes investment decisions. Version Control - The task of organizing a system or product containing many versions. Vertical Search Engine - Search engines that use a focused crawlers, only focusing on relevant web pages by limiting the amount of topics on resulting web pages. Vesting - The act of a company granting stock options to an employee. Viral Coefficient - A measure of virality designed to gauge how often users of a product introduce that product to others. Viral Cycle Time - The amount of time required for a customer to see a product, use it, and invite others to try it. Viral Loop - An incentive-based system where users are rewarded for sharing a product with others. Viral Marketing - A marketing technique that encourages users to pass on marketing information, creating exponential growth. Voting Right - A stockholder's right to vote on matters of corporate management. Wantrapreneur - Someone who wants to be an entrepreneur or enjoys the status of calling themself an entrepreneur, but lacks the direction, determination, or work ethic required to actually execute and build an impactful business. Warrant - The right to buy or sell a given security at a certain price during a specified period. Waste - Human activity that brings no value. Waterfall Methodology - A product life cycle strategy including Analysis, Design, Development, Testing, and Deployment phases. Website Pageviews - The accessing of a page by a visitor or user. Weekly Active Users (WAU) - The amount of users of a service or product in a seven day period. Well - A narrow startup that aims to do one thing very effectively and caters to a specific audience. White Label - A product or service produced by a single company that another company chooses to rebrand for their own use or distribution. Wicked Problem - A problem that is difficult to solve because of constantly changing criterion or problem sources. Wideness - An estimation of how many people will eventually use a product. Widget - A small application that provides information in a customizable manner. Wireframe - A representation of the virtual framework of a website. Wireframes allow people to easily arrange elements to optimize ease of use. Wizard of Oz Minimum Viable Product (WoOMVP) - A version of a product that looks functional, but it actually operated by a human behind the scenes, granting the appearance of automation. Yak Shaving - A seemingly pointless task that must be completed in order to progress. Zone of Insolvency - The state in which a company is very close to being insolvent with insufficient money or assets to pay off its liabilities.
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