As Africa’s startup ecosystem accelerates, founders, investors and operators are set to encounter an ever-expanding universe of jargon, metrics and methodologies. Whether you’re building your first product, raising your next round, or evaluating deal flow, the tech world moves quickly — and the language moves even faster.
This glossary distils the essential terminology every startup founder, VC, angel investor and innovation leader needs to navigate the ecosystem with confidence. Consider it your go-to Tech-saurus — a living reference designed for pitch rooms, boardrooms and build sprints alike.
Let’s get started.
A - Key Startup and Tech Terms You Need to Know
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 - Business, Branding and Bootstrapping Terms
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.
C - Capital, Customers and Company Structures
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.
D - Data, Deals and Due Diligence
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.
E - Early-Stage Startup and Equity Essentials
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.
F - Finance, Funding and Founder Concepts
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.
G - Growth, Go-To-Market and Governance Terms
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.
H - High-Growth Startup and User Metrics
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.
I - Innovation, IP and Investment Terms
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.
J - Joint Ventures and Brand Turning Points
Joint Venture – A temporary partnership formed to achieve a specific objective.
Jumping the Shark – The point when a brand’s evolution begins to decline.
K - KPI and Key Talent Definitions
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.
L - Late-Stage Startup and Liquidity Terms
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.
Lungile is the Digital Editor for Startup.Africa, with a knack for storytelling, technology and innovative ideas. Working with Startup.Africa, she takes simple ideas and turns them into amazing stories.
