The startup world runs on innovation and buzzwords. From pitch decks to MVPs and runway, it’s easy to get lost in the lingo. Whether you're launching your first venture or raising your next round, knowing the right terms is essential to communicate clearly, close deals, and grow faster. 

This glossary breaks down the startup vocabulary that matters, giving you simple, straight-to-the-point definitions for the concepts you’ll hear in meetings, investor calls, and pitch events. 

 Discover our selection of Terminology you need to know as a startup founder!  

Advanced Startup Terminology

Acqui-hiring: A recruitment strategy where a company acquires another primarily for its talented staff rather than for its products or services.

Cliff: In employee stock options, a cliff refers to the minimum time period an employee must work before their stock options begin to vest. A typical arrangement might include a one-year cliff followed by monthly or quarterly vesting.

Sweat Equity: Ownership interest or increase in value created through physical labor and intellectual effort rather than financial investment.

Term Sheet / Letter of Intent: A non-binding document outlining the basic terms and conditions of an investment agreement. It serves as a template for more detailed, legally binding documents.

Unicorn: A privately held startup company valued at over $1 billion. The term was coined by venture capitalist Aileen Lee in 2013 to highlight the rarity of such successful ventures.

Business Development and Operations

Churn Rate: The percentage of customers who stop using a product or service over a specific period. A high churn rate indicates customer dissatisfaction or the existence of better alternatives in the market.

Death Valley Curve: The period between a startup's initial capital infusion and when it begins generating positive cash flow from operations. This challenging phase is characterized by high expenses and minimal revenue.

Disruptive Technology: Any technology that takes an industry, forces consumers to think differently, and is then adopted as the new norm. Examples include companies like Uber, Lyft, and Airbnb, which fundamentally changed their respective industries.

Exit Strategy: The method by which company founders and investors plan to "exit" their investment, typically through acquisition, merger, or initial public offering (IPO). A standard multiple with technology investments seems to be 10x the original investment.

Freemium: A business model where a company offers basic services for free while charging for premium features. This approach helps attract a large user base while generating revenue from a subset of users who require advanced functionality.

Growth Hacking: An innovative marketing strategy focused on rapid experimentation across marketing channels and product development to identify the most effective ways to grow a business.

Hockey Stick: A growth pattern that resembles a hockey stick on a graph, showing initial slow growth followed by a sudden, dramatic increase. This pattern is often sought after by investors and is considered indicative of successful scaling.

Lean Startup: A methodology developed by Eric Ries that emphasizes quick product iterations, customer feedback, and validated learning to shorten product development cycles and reduce market risks.

Minimum Viable Product (MVP): The most basic version of a product that still delivers enough value for early customers to use and provide feedback. An MVP helps startups test their core assumptions with minimal resources.

Pivot: A significant business strategy shift in response to market feedback, changing conditions, or new opportunities. Pivoting involves fundamentally changing one or more aspects of a business model while maintaining the core vision.

Runway: The amount of time a startup has before it runs out of money, calculated by dividing the current cash balance by the monthly burn rate. Extending runway is a critical concern for early-stage startups.

Scalable: The ability of a business model to handle growth without being hampered by its structure or available resources. A scalable business can increase revenue significantly without a proportional increase in costs.

Ecosystem Value

A measure of economic impact that is calculated as the value of exits and startup valuations.

Funding and Investment Terms

Accelerator: A program designed to speed up the success of startups. Accelerators support early-stage startups in pre-seed stages by providing mentorship, resources, advising hours, or co-working space in exchange for a percentage of ownership in the startup. These programs usually last several months and give chosen startups the required boost to take their launched MVP or product to the next level. The competition for top accelerator programs is fierce, with only 1-2 out of 100 applicants making the cut.

Angel Investor / Business Angel: An individual who provides capital to a startup business, usually in exchange for ownership equity in the company. Angel investors typically invest in startups at a time when other investors, such as venture capitalists, are not prepared to back them. They provide capital that may be a one-time investment or ongoing support through the early concept and pre-seed phases.

Bootstrapping: The process of starting a business without any outside investment from sources like angel investors, accelerators, or venture capital. While bootstrapping allows entrepreneurs to maintain full ownership, control, and equity in their business, it can lead to cash flow shortages—one of the top reasons for business failure—potentially hindering a startup's success or ability to scale.

Bridge Loan / Swing Loan: A short-term loan designed to provide financing for a specific period until a startup can secure a more permanent source of funding.

Burn Rate / Run Rate: The rate at which a startup spends its available money, often venture capital. It's typically calculated as cash spent per month and is a measure of negative cash flow before a company breaks even and generates positive cash flow.

Seed Funding / Seed Round / Seed Stage: The initial capital raised to start a business, often used for product development, market research, or building a team. This funding typically comes from friends, family, angel investors, or early-stage venture capitalists.

Venture Capital: Funding provided by investors to startups and small businesses with long-term growth potential. Venture capital typically comes from wealthy individuals, investment banks, or financial institutions and is provided in exchange for equity in the company.

Global Startup Economy

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The global economic value created by tech startups. In data terms, this is measured as the sum of tech startup valuations and exits in the world over a two-and-a-half-year time period.

Marketing and Growth Terms

Early Adopters: The first users of a product who typically act as key influencers and are active on social media. These users provide honest and direct feedback, which is valuable for product improvement and can lead to free exposure if they are effectively engaged.

Evangelist: Someone inside an organization who is exceptionally enthusiastic about the company. Evangelists often go above and beyond their expected role to help promote the company due to their strong belief in its mission and products.

Value Proposition / Value Prop: A clear statement explaining how a product solves customers' problems, delivers specific benefits, and tells the ideal customer why they should buy from you rather than from the competition.

Software Startup Output: The number of software startups in an ecosystem, calculated using the Multiple System Estimation (MSE) method.

Technology and Development Terms

Agile: An iterative method of establishing clear organizational tasks and requirements, continuously developing solutions, and making decisions quickly. Teams break projects into small, manageable pieces to maintain momentum and adapt to changes efficiently.

Building in Public: A strategy where founders share their startup journey, including successes and failures, with their audience in real-time. This approach builds trust, creates accountability, and can help attract a community of supporters.

Discovery Phase: The initial stage of product development focused on understanding user needs, market conditions, and technical feasibility before committing resources to building a solution.

Iteration: The process of repeatedly refining a product based on testing and feedback. Each iteration improves upon the previous version, gradually enhancing the product's value and user experience.

Business Models and Structures

B2B (Business-to-Business): A business model where a company sells products or services to other businesses rather than to individual consumers. Wholesale suppliers selling to retailers exemplify this model.

B2C (Business-to-Consumer): A business model where a company sells products or services directly to individual consumers without intermediaries.

B2B2C (Business-to-Business-to-Consumer): A mutually beneficial e-commerce model where a company teams up with a business client to sell jointly to end customers, controlling more of the transaction and increasing visibility. Amazon is an example of this model.

Cottage Business/Industry: A small-scale, decentralized manufacturing operation often run from a home or small workshop. These businesses typically produce limited quantities of specialized or artisanal products.

Funding Growth and Performance Metrics

Funding Growth Index: An index measuring growth in early-stage funding (Seed and Series A) in tech startups within an ecosystem year over year. It's measured on a scale of 1 to 10, where 10 represents the highest tier of growth observed.

Output Growth Index: An index measuring growth in total startup creation in an ecosystem, calculated as an annualized growth rate. Like the Funding Growth Index, it uses a scale of 1 to 10.

Exit Growth Index: An index measuring growth in tech startup exits in an ecosystem year over year. Also measured on a scale of 1 to 10, with 10 representing the highest growth tier observed.

Valuation and Financial Metrics

Pre-money Valuation: The value of a company before it receives external funding or the latest round of financing. This valuation helps determine the equity stake investors will receive for their investment.

Post-money Valuation: The value of a company immediately after the most recent round of financing. It equals the pre-money valuation plus the amount of new equity invested in the company.

Return on Investment (ROI): A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (return) by the cost of the investment.

Bubble: Part of an economic cycle characterized by a rapid increase in market value of an industry or company. Created by a surge in asset prices, bubbles eventually "burst" when the market corrects, resulting in a rapid decrease in value, such as the dot-com bubble of the 1990s.

Financial and Fundraising Documents

Balance Sheet: A statement of a company's financial situation at a specific point in time. Keeping this document up-to-date is crucial when engaging with potential investors.

Pitch Deck: A brief presentation that provides investors with an overview of your business, typically covering the business model, financials, market opportunity, and team. An effective pitch deck tells a compelling story about your startup and its potential.