Intermediate exits
Acqui-hire
An acqui-hire is an acquisition where the buyer's primary goal is to hire the target company's team, not acquire its product.
Glossary
Definitions of key startup terms, from MVP to venture capital.
A
Intermediate metrics
Activation Rate
The % of new users who reach your product's core value moment within a defined window. The most predictive early-stage metric for long-term retention.
Beginner fundraising
Angel Investor
An angel investor funds early-stage startups with personal capital for equity, typically before VCs participate. Many are former founders or operators.
Beginner metrics
ARR — Annual Recurring Revenue
ARR is the annualized value of all active subscriptions. It is the primary top-line metric for SaaS companies and a key signal for fundraising readiness.
B
Beginner strategy
Bootstrapping
Bootstrapping means building a startup using personal savings and revenue, without external investors. Founders retain full ownership and control.
Intermediate fundraising
Bridge Round
A bridge round is a small financing to extend a startup's runway until a larger funding round or key milestone is reached.
Beginner finance
Burn Rate
Burn rate is the monthly rate at which a startup spends cash. It determines how much runway remains before the company must raise more money or turn profitable.
C
Intermediate metrics
CAC — Customer Acquisition Cost
CAC is the total cost to acquire a new customer, including all sales and marketing spend. A core unit economics metric for evaluating business viability.
Intermediate equity
Cap Table
A cap table tracks who owns what in a startup — founders, investors, and employees — and how ownership changes across funding rounds.
Beginner metrics
Churn Rate
Churn rate is the percentage of customers or revenue a business loses over a given period. The most important retention metric for any subscription business.
Intermediate metrics
Cohort Analysis
A method of grouping users by a shared trait—typically signup date—and tracking their behavior over time to reveal retention trends.
Intermediate strategy
Competitive Moat
A competitive moat is a durable advantage that protects a startup's market position from competitors. Network effects and switching costs are the strongest.
Intermediate fundraising
Convertible Note
A convertible note is short-term startup debt with interest and a maturity date that converts into equity when a future priced round closes.
D
Intermediate strategy
Default Alive
A startup is default alive if its revenue growth will reach profitability before cash runs out. Coined by Paul Graham in 2015.
Intermediate fundraising
Down Round
A down round occurs when a startup raises capital at a lower valuation than its previous round, triggering dilution and anti-dilution.
Intermediate fundraising
Due Diligence
The structured investigation an investor conducts before closing a deal, covering financials, legal, product, team, and market validity.
E
Intermediate equity
Equity Dilution
Equity dilution occurs when a startup issues new shares, reducing existing shareholders' ownership percentage. It happens at every funding round.
F
G
Beginner finance
Gross Margin
Revenue minus Cost of Goods Sold, divided by revenue. The foundational profitability metric that drives SaaS valuation multiples and unit economics.
Intermediate growth
Growth Hacking
A discipline of rapid, low-cost experimentation across product and marketing channels to find scalable, repeatable growth levers.
I
Intermediate exits
IPO — Initial Public Offering
An IPO is when a private company first sells shares to the public on a stock exchange, providing liquidity and access to large capital pools.
L
Intermediate fundraising
Letter of Intent (LOI)
A Letter of Intent is a non-binding document expressing intent to enter an agreement, used in B2B sales and M&A transactions.
Intermediate fundraising
Liquidation Preference
The right of preferred investors to be paid back before common shareholders in a liquidation or sale event, protecting downside.
Intermediate metrics
LTV — Lifetime Value
LTV is the total revenue a business expects from a customer over their lifetime. The key metric for justifying acquisition spend and evaluating unit economics.
M
Beginner metrics
MRR — Monthly Recurring Revenue
MRR is the total recurring subscription revenue a SaaS company earns each month. It is the operational heartbeat metric for tracking short-term growth.
Beginner product
MVP — Minimum Viable Product
An MVP is the simplest version of a product that allows a startup to test its core value hypothesis with real users and gather validated learning.
N
Intermediate metrics
North Star Metric
The North Star Metric is the single number that best captures the core value a product delivers to customers and predicts long-term sustainable growth.
Intermediate metrics
NRR — Net Revenue Retention
NRR measures how much recurring revenue is retained and grown from existing customers. Above 100% means the company grows revenue without any new customers.
P
Intermediate finance
Payback Period
Months to recover the cost of acquiring a customer from that customer's gross profit contribution. Best-in-class SaaS is under 12 months.
Beginner strategy
Pivot
A structured course correction that changes a startup's strategy while preserving validated learning from prior experiments.
Intermediate fundraising
Pre-Money and Post-Money Valuation
Pre-money valuation is a company's value before investment. Post-money adds the investment amount. Both determine investor ownership.
Beginner fundraising
Pre-Seed Round
A pre-seed round is the earliest startup funding stage, covering idea to prototype. Check sizes range from $100K to $1M from angels and micro-VCs.
Intermediate fundraising
Pro-Rata Rights
The right of an investor to participate in future funding rounds to maintain their ownership percentage in the company.
Intermediate growth
Product-Led Growth (PLG)
Product-led growth is a go-to-market strategy where the product itself drives user acquisition, conversion, and retention without a traditional sales team.
Beginner strategy
Product-Market Fit
Product-market fit is the degree to which a product satisfies strong market demand — when a startup finds an audience that genuinely needs what it has built.
R
Intermediate fundraising
Revenue-Based Financing
Revenue-based financing gives startups capital in exchange for a percentage of future revenue, with no equity dilution and no fixed monthly payments.
Intermediate metrics
Rule of 40
Growth rate % plus EBITDA margin % must equal or exceed 40. The single metric VCs use to balance SaaS growth against profitability efficiency.
Beginner finance
Runway
Runway is how many months a startup can operate before running out of cash. It defines the time to reach the next milestone or close the next funding round.
S
Intermediate fundraising
SAFE — Simple Agreement for Future Equity
A SAFE lets investors fund startups in exchange for future equity, with no interest rate or maturity date. Created by Y Combinator in 2013.
Intermediate strategy
Sales-Led Growth (SLG)
A growth model where the sales team drives acquisition and conversion — the dominant motion for high-ACV B2B products and complex enterprise deals.
Beginner fundraising
Seed Round
A seed round is a startup's first institutional funding, used to validate the product, build the core team, and reach the traction needed for a Series A.
Intermediate fundraising
Series A
A Series A is the first major priced VC round, raised after a startup shows product-market fit and consistent growth. It funds scaling the go-to-market engine.
Intermediate fundraising
Series B Round
Series B is a growth-stage VC round that funds scaling a proven business. Typically requires $8–15M ARR, 80%+ YoY growth, and NRR above 110%.
Beginner equity
Stock Options
Stock options give employees the right to buy company shares at a fixed strike price. ISOs and NSOs are the two main types used by startups.
T
Intermediate engineering
Technical Debt
The implied cost of future rework created when a team chooses a faster, easier solution today instead of a better long-term approach.
Intermediate fundraising
Term Sheet
A term sheet is a non-binding document outlining the key terms of a VC investment deal before formal legal agreements are drafted.
U
Intermediate finance
Unit Economics
The direct revenues and costs associated with a single unit of a business, used to determine per-unit profitability and scalability.
V
Beginner equity
Vesting
Equity vesting is how founders and employees earn their shares over time, ensuring long-term alignment between the team and the company's success.
Beginner equity
Vesting Cliff
A vesting cliff is a threshold period — typically one year — before which no equity vests, protecting companies from early team departures.
Intermediate growth
Viral Coefficient
Also called K-factor: the average number of new users each existing user generates. K above 1 means exponential viral growth; below 1 is partial amplification.