Startup & Venture Glossary

A/B Testing

Testing two variations of a product or content to determine which performs best. For example, categorising users into different groups and comparing their experiences.

AARR

A startup success model combining acquisition, activation, retention, referrals and revenue as performance data points.

Above Ground Risk

The risk of political, social or cultural factors influencing a business.

Above Market Cost

The extent to which a product is more expensive than alternative offerings.

Absolute Advantage

Producing goods with little to no input or with superior efficiency.

Accelerator

A structured support programme designed to help startups grow rapidly through mentorship, education, technical resources and often funding. Founders typically apply and compete for entry.

Accelerated Vesting

Vesting that takes place more quickly than originally planned, enabling individuals to access the monetary benefits of their stock options earlier.

Accounts Payable

Money owed by a company to suppliers or creditors after goods or services have been delivered.

Accounts Receivable

Money owed to a company by customers after products or services have been delivered.

Accredited Investor

An individual who meets legal requirements to invest in certain private ventures.

Accrual Basis

Accounting method that reports income when earned and expenses when incurred.

Accrued Interest

Interest accumulated on a debt or asset since the last interest payment.

Acquired Knowledge

Information external to a company that can be purchased or hired.

Acquisition

Taking a controlling interest (50% or more) in a company.

Actionable Metric

Data that links actions to outcomes, enabling data-driven decision-making.

Active Buyer

A customer who has made a purchase within the past 12 months.

Active Users

The measurable number of users taking action on a platform or product.

Ad Hoc

A project or initiative created to solve a specific problem.

Addressable Market

The total possible market for a product.

Advertising to Sales Ratio

A metric measuring advertising effectiveness by comparing spend to resultant sales.

Advisor Agreement

A document outlining an advisor’s role, commitments and—optionally—equity compensation.

Advisory Board

External advisors who provide strategic guidance.

Agile Methodology

A strategic approach used in software development involving incremental sprints to address the unpredictability of product development.

Alpha Test

Controlled internal testing of a pre-production model to detect design or functionality issues.

Analysis Paralysis

Inability to make decisions due to excessive data.

Analytics

Tools used to track and analyse user behaviour.

Angel Fund

A group of angel investors coordinating investment activities.

Angel Investor

An individual investing in startups in exchange for equity or debt.

Anthropomorphising

A research tactic where users describe a product or brand using human personality traits.

Anti-Dilution Agreement

A legal provision protecting early investors from dilution during future investment rounds or exits.

Apportunity

An opportunity to improve an app or transform it into a more desirable product.

Association Techniques

A research tactic where users list words they associate with a product.

Average Order Volume (AOV)

The average size of each purchase order.

Average Revenue Per User (ARPU)

Total revenue divided by the number of users.

Average Size of Sale

Average revenue generated per sales contract.

B Corporation

A for-profit business addressing social and environmental issues.

Back of the Napkin Model

A simple business model sketched informally, often literally on a napkin.

Balance Sheet

A document detailing a company’s assets, liabilities and equity.

Benchmark

A metric used to measure performance or success.

Beta Test

External pilot testing conducted after alpha testing to identify issues under real-world conditions.

Board of Directors

Individuals elected by shareholders to oversee company activities. Investors often request board seats in exchange for funding.

Boiling the Ocean

Attempting an idea that is too broad or overly ambitious.

Bootstrapping

Building a business without external funding.

Bottom Line

Net profit, appearing at the bottom of financial statements; also referred to as net income.

Brand Activation

Using communication channels to drive engagement and brand recognition.

Brand Architecture

A company’s brand family structure and how its brands relate to one another.

Brand Equity

The value derived from a brand’s recognition and reputation.

Brand Licensing

Allowing manufacturers to produce and sell products under a brand in exchange for profit shares.

Break-Even Point

Revenue required to cover all operational costs.

Bridge Financing

Short-term financing used to support cash flow, typically repaid quickly.

Build-Measure-Learn

A continuous product development cycle for validating and improving ideas.

Burn Rate

The rate at which a company spends cash.

Business Model Canvas

A visual tool used to design, analyse and pivot business models.

Business Plan

A detailed document outlining how a company will achieve its objectives.

Buy-and-Sell Agreement

A document outlining what happens if a co-owner leaves the company.

Buyout

Purchasing enough shares to gain control of a company.

Capital

Cash, goods and assets available for use.

Capital Expenditures (CapEx)

Purchases expected to generate long-term benefits.

Capital Gain

The difference between an asset's purchase price and selling price.

Capital Under Management

The total capital a management team oversees for venture investment.

Capitalisation Table

A table listing all securities issued by a company and their ownership breakdown.

Capped Notes

When a valuation cap is placed on a company during an investment round.

Carried Interest (Carry)

The share of investment profits fund managers receive without contributing capital.

Cash Basis

Accounting method recording revenue and expenses only when payments occur; ideal for startups with small inventories.

Cash Flow

Net cash moving into and out of a business.

Chicken and Egg Dilemma

A situation where users are needed to create content but content is needed to attract users.

Churn

Any quantifiable loss, such as customers, cohorts or revenue.

Churn Rate

The percentage of customers who stop subscribing.

Cliff

The period before a founder or employee becomes partially vested in stock options.

Cliff Vesting

Granting all long-term benefits or options at a single point rather than gradually.

Closing

The final stage of an investment where legal documents are signed.

Co-Founder

A joint founder who shares equity.

Co-Founder Agreement

A document detailing responsibilities, roles and equity splits.

Cohort

A customer group defined by a specific unifying characteristic.

Cohort Analysis

Analysing trends by categorising users into groups.

Competitive Analysis

Evaluating competitors’ strengths and weaknesses.

Concierge Minimum Viable Product (CMVP)

A manual service replicating the steps of a final product.

Conversion Funnel

The journey from discovering a product to becoming a customer.

Conversion Rate

The percentage of prospects converted to customers.

Conversion Rate Optimisation (CRO)

Adjusting a website or landing page to improve engagement.

Convertible Debt/Equity

Investments designed to convert into equity during a future valuation event.

Cost of Goods Sold (COGS)

Costs of producing goods, including raw materials and labour.

Cost Per Action (CPA) Marketing

Online advertising where payment is based on measurable results.

Cost Structure

Analysis of business expenses and their necessity.

Credit

An accounting entry that decreases assets or increases liabilities.

Cross-Elasticity

Consumer behaviour showing which products are substitutes.

Crowdfunding

Raising funds via many individual contributors on an online platform.

Current Assets (CA)

Assets used within one year.

Current Liabilities

Debts payable within one year.

Customer Acquisition Cost (CAC)

The full cost of acquiring a customer.

Customer Archetype

The typical or ideal target customer.

Customer Life Cycle

The steps a customer goes through when engaging with a product.

Customer Retention

Practices used to retain customers.

Customer Segments

The breakdown of different customer groups who benefit from a product.

Daily Active Users (DAU)

Number of users interacting with a product within 24 hours.

Data Mining

Querying large datasets to extract insights.

Deal Flow

The rate at which investment opportunities are presented.

Deal Room

A space where investment discussions and negotiations occur.

Debit

An accounting entry that increases assets or reduces liabilities.

Debt

Loans requiring repayment over time.

Debt Financing

Raising capital by selling bonds or notes with the promise of repayment plus interest.

Deepness

A measure of the ultimate value an idea can deliver.

Design-Thinking

Problem-solving by immersing in customer experiences and analysing interactions.

Dilution

Reduction of ownership percentage as new equity is issued.

Disclosure Documents

Documents prepared by investors detailing compliance requirements and investment specifics.

Disruptive

Creating a new market that displaces an existing one.

Dogfooding

A company using its own product to demonstrate confidence in it.

Due Diligence

Investor analysis of a company prior to investment.

Early Adopter

A person or business that uses a product before the majority.

Early Majority

The first sizeable customer segment to adopt a new product.

Early Stage

The earliest startup phase, often pre-valuation.

Ecopreneur

An entrepreneur focusing on environmentally friendly products.

Elastic

When a small price change causes a large change in demand.

Employment Terms

A legal document outlining employment requirements and benefits.

Entrepreneur in Residence (EIR)

An experienced entrepreneur advising within a venture firm.

Equity

Ownership in a company, typically represented through shares.

Equity Financing

Funding provided in exchange for ownership.

Equity Grants

Equity given to employees, often with a waiting period before vesting.

Exit

When an investor sells their stake to realise gains or losses.

Exploding Offer

An investment offer withdrawn if not accepted quickly.

Failing Forward

Learning from failure to build a better product.

Financial Model

A quantitative representation of a financial situation, portfolio or project.

Finder’s Fee

Payment to a third party for introducing investors or acquirers.

First Mover Advantage

Benefits gained by being the first in a market space.

First Refusal

A clause requiring shares to be offered to early investors before third parties.

Fixed Assets (FA)

Long-term assets that benefit a company for more than one year.

Fixed Costs

Costs that do not change with sales volume.

Founder

An entrepreneur who starts a venture.

Freemium

A free service with optional paid features.

Full-Ratchet

An anti-dilution provision protecting investors from extreme dilution.

Fund of Funds

A mutual fund that invests in other funds.

Future Value

The projected value of an asset in future.

Gamification

Adding game elements to non-game experiences to increase engagement.

General Ledger

A complete record of all financial transactions over a company’s lifetime.

Generally Accepted Accounting Principles (GAAP)

Standard accounting rules for financial reporting.

Go-To-Market (GTM) Strategy

A plan to enter and gain market share.

Going Private

Transitioning from a public company to a private one via stock repurchase.

Golden Handcuffs

Benefits designed to prevent key employees from leaving.

Golden Parachute

A significant payout granted to executives upon dismissal, often after a takeover.

Greenfield

A market with no restraints or prior solutions.

Gross Margin

Percentage of revenue retained after deducting production costs.

Gross Profit

Revenue minus production, support and delivery costs.

Ground Floor

The earliest startup phase.

Growth Hacker

An employee focused on achieving rapid, viral growth.

Hard Sell

A forceful sales approach encouraging immediate purchase.

Hockey Stick

An upward growth trend resembling a hockey stick graph.

Holding Company

An entity created to hold assets with minimal operating functions.

Hourly Active Users (HAU)

Number of users engaging with a product in a 60-minute period.

Hybrid Viral Model

Combining viral user acquisition with paid channels such as search or SEO.

Ideation

The creative process of generating and communicating ideas.

Impressions

A metric measuring exposure generated from an advertisement.

In-App Purchases

Sales made by users within an application.

Income Statement

A summary of sales, expenses and net profit over a period.

Incorporation

Legally forming a company.

Incubator

An organisation supporting entrepreneurs with shared resources and expertise.

Indication of Interest (IoI)

A potential customer expressing interest in a product.

Inelastic

When a price change causes little change in demand.

Initial Public Offering (IPO)

A company’s first public sale of shares.

Intellectual Property

Legal ownership of intangible ideas or concepts.

Investor Rights Agreement (IRA)

A legal document protecting investor interests during funding processes.

Iteration

One cycle of an agile development process, including analysis, design, development and testing.

Joint Venture

A temporary partnership formed to achieve a specific objective.

Jumping the Shark

The point when a brand’s evolution begins to decline.

Key Employee

A co-founder or early hire critical to a company’s success, often compensated with equity.

Key Performance Indicators (KPIs)

Metrics used to measure progress and success.

Laggards

The customer segment most hesitant to adopt new products.

Late Majority

The final large group of customers to adopt a product.

Late Stage

A later phase of a startup with a proven product and business model.

Lead Generation

Attracting and capturing potential customers to build a sales pipeline.

Lead Investor

The largest investor in a funding round, often the principal provider of capital.

Leads

Prospective customers who have shared their contact information.

Leaky Bucket

An analogy describing how products lose customers over time.

Letter of Intent (LOI)

A document outlining proposed terms between companies.

Leveraged Buyout

Acquiring a company using borrowed funds to purchase remaining shares.

Liabilities

The financial obligations of a company.

Licensing

Allowing another company to manufacture or distribute a product for payment.

Lifestyle Business

A profitable company designed to operate sustainably but without plans for major scale.

Lifetime Value of Customer (LTV)

Net profit a single customer will generate over time.

Limited Liability Company (LLC)

A company structure that protects members from personal liability.

Limited Liability Partnership (LLP)

A partnership offering limited liability to partners.

Limited Partner (LP)

An investor with limited control over a partnership but fewer liquidation restrictions.

Liquidation

Turning securities into cash, often during an exit.

Liquidation Preference

The right to receive a predetermined amount in exchange for equity, especially during dissolution.

Liquidity Event

An event allowing investors to realise gains by selling equity.

Long-Term Liabilities

Debts payable beyond one year.

Loss Leader Pricing

Selling a product at a loss to attract customers.

Low Hanging Fruit

A task or idea with high potential and minimal risk, often found in low-competition markets.

Market Pull

Product development driven primarily by customer demand rather than internal assumptions.

Maturity

The stage at which a company has stable revenue, predictable operations and clear market positioning.

Merger

The combination of two companies into a single new entity.

Moonshot

An ambitious, high-risk innovation effort aimed at achieving a major breakthrough rather than incremental improvement.

Minimum Viable Product (MVP)

The simplest functional version of a product released to gather user feedback and validate market demand.

Net Promoter

A customer who is likely to recommend a product or service to others.

Net Sales

Total sales generated after deducting returns, damaged goods and missing products.

Open Rate

The percentage of successfully delivered emails or advertisements that are opened by recipients.

Operating Margin

A profitability ratio that measures operational efficiency and pricing strategy.

Overhang

A situation where an investor’s liquidation preferences exceed the company’s current value.

Paper Prototype

A usability testing method in which users interact with a manual, low-fidelity version of an interface to simulate functionality.

Pay Per Click (PPC)

An online advertising model where advertisers pay only when users click on their advert.

Piecemeal Minimum Viable Product (PMVP)

A functional product model that uses existing tools and services to replicate the intended user experience.

Pilot Operation

A small-scale test designed to evaluate the viability of a full product or service.

Pipeline Value

The total potential value of all sales opportunities within a sales funnel.

Pivot

A strategic change in direction based on learning, data or market feedback.

Post-Money Valuation

The value of a company after an investment has been made.

Pre-Accelerator

A programme offering mentorship and support to startups before they enter a formal accelerator.

Pre-Emptive Right

A clause allowing investors to maintain their ownership percentage during future share issuances.

Pre-Money Valuation

The value of a company before new investment capital is added.

Preferred Stock

Shares that carry preferential rights, often including dividends and liquidation priority.

Present Value

The current worth of a future sum of money, discounted to reflect time and risk.

Private Equity

Investments made in private companies whose shares are not publicly traded.

Prototype

An early version of a product used to test feasibility, usability or scalability.

Purchase Pretzel

A model of customer decision-making that reflects its non-linear and complex nature, unlike a traditional funnel.

Quality Assurance (QA)

The process of ensuring that a product meets defined quality standards and customer expectations.

Quorum

The minimum number of shareholders or directors required to legally conduct a meeting or vote.

Ramen Profitable

A company that generates enough profit to cover the basic living expenses of its founders or team.

Recurring Revenue

Predictable income generated on a regular basis, excluding one-off or professional service fees.

Repositioning

A marketing strategy aimed at changing how a product is perceived by customers.

Retargeting

A marketing technique that serves ads to users who have previously interacted with a product or brand.

Retention Rate

A metric measuring how many customers remain over a given period.

Return on Investment (ROI)

A performance metric calculated by dividing net profit by the cost of an investment, usually expressed as a percentage.

Revenue

The total income generated from sales before expenses.

Risk Tolerance

The level of risk an investor is willing to accept.

Run Rate

Projected annual revenue based on current performance, excluding churn.

Sandbox

A controlled environment where experimentation can occur without risk to core systems or operations.

Scalability

The ability of a product or business to grow without a proportional increase in costs.

Scalable

Describes a business that can maintain or improve profit margins as sales increase.

Scheduled Vesting

A predefined timeline determining when employees gain access to equity.

Scope

The defined boundaries and deliverables of a project.

Scrum

An agile development framework characterised by short iterations, self-organising teams and frequent communication.

Secondary Public Offering

The sale of additional shares to the public after an initial public offering (IPO).

Secondary Purchase

The purchase of shares from an existing shareholder rather than directly from the company.

Securities

Financial instruments representing equity or debt.

Seed Round

The first formal round of funding, typically used to build a prototype or validate a concept.

Seed Stage

An early startup phase where profitability is unlikely and capital is focused on learning and validation.

Series A

The first major venture capital funding round, usually involving preferred shares.

Series B/C/D/E

Later funding rounds focused on scaling and expansion.

Serviceable Available Market (SAM)

The portion of the total market that a company can realistically target.

Share Consent

A legal provision requiring investor approval before issuing or selling shares.

Sitcom Startup Idea

A contrived startup concept driven by the desire to build something rather than solve a real problem.

Software-as-a-Service (SaaS)

Software delivered via the internet on a subscription basis.

Stakeholder

Any individual or group with an interest in a company’s performance or outcomes.

Startup

A company in the early stages of development, typically focused on growth and innovation.

Statutory Voting

A board voting system where each share carries one vote.

Steps to Revenue

A defined roadmap outlining how a company plans to generate income.

Stickiness

A measure of user engagement and retention.

Stock Options

The right to buy or sell shares at a predetermined price within a set timeframe.

Stockholder

An individual or entity that owns shares in a company.

Story Point

A unit used in scrum to estimate the effort required to complete a task.

Strategic Investors

Investors who provide industry expertise, networks or operational support in addition to capital.

Sweat Equity

Ownership granted in exchange for labour or services rather than cash.

Syndication

A venture capital practice where multiple investors jointly fund a company.

Tag-Along Rights

Rights allowing investors to sell their shares on the same terms as founders in a sale.

Term Sheet

A non-binding document outlining the key terms of an investment.

The One Metric That Matters (OMTM)

A single, focused metric used to guide decision-making and measure success.

Total Available Market (TAM)

The total demand for a product or service if market share were unlimited.

Tractability

An assessment of how difficult it is to launch a functional first version of a product.

Traction

Evidence that users are actively adopting and using a product.

Uncapped Notes

Convertible instruments without a valuation cap, often favouring founders.

Unicorn

A privately held technology company valued at over US$1 billion.

Unique Value Proposition (UVP)

A clear statement explaining why a product is valuable and differentiated.

Unit Economics

Revenue and costs analysed on a per-unit basis.

User Acquisition

The process of converting individuals into active users.

Valuation

The process of determining a company’s financial worth.

Venture

A business endeavour involving risk and potential reward.

Venture Capitalist

An investor who deploys capital from a venture capital fund into high-growth companies.

Vesting

The process by which employees earn equity over time.

Viral Coefficient

A measure of how effectively users bring in additional users.

Voting Right

A shareholder’s right to vote on corporate matters.

Warrant

The right to buy or sell a security at a fixed price within a specified period.

Waterfall Methodology

A linear product development approach consisting of sequential phases.

Weekly Active Users (WAU)

The number of users engaging with a product over a seven-day period.

Well

A narrowly focused startup designed to serve a specific audience exceptionally well.

White Label

A product produced by one company and rebranded by another.

Wicked Problem

A complex issue with no clear solution due to shifting requirements or constraints.

Wizard of Oz MVP (WoOMVP)

A product that appears automated but is operated manually behind the scenes.

Yak Shaving

Completing a series of seemingly unrelated tasks that are necessary to achieve a larger goal.

Zone of Insolvency

A financial state where a company is close to being unable to meet its obligations.