The A to Z of Startups

A method of comparing two versions of a page or feature against each other to see which performs better.

A fixed-term program that supports early-stage startups with mentorship, capital, and networking, usually ending in a demo day where founders pitch to investors.

The moment a new user first experiences the core value of a product, a key step between signing up and becoming a retained user.

The average annualised revenue from a single customer contract, used to size and compare deals.

An individual who invests their own money into early-stage startups, typically in exchange for equity or convertible instruments.

The average amount a customer spends per transaction, a lever for revenue growth alongside traffic and conversion.

Recurring revenue divided by the number of active paying customers, showing whether a business is moving up-market or down-market.

The annualised value of all active subscriptions, calculated as MRR multiplied by 12, and the standard unit for talking to investors once a company passes roughly $1M.

The practice of assigning credit for a sale or signup to the marketing touchpoints that led to it, so spend can be judged by what it returns.

Business-to-business sells to other companies; business-to-consumer sells directly to individual people.

The first narrow, winnable customer segment a startup targets to gain traction and credibility before expanding, named after the military idea of securing a foothold before advancing inland. The term comes from Geoffrey Moore's Crossing the Chasm and was formalised by Bill Aulet's Disciplined Entrepreneurship.

Building and growing a company using personal savings and revenue rather than outside investment.

Expanding from a beachhead into adjacent market segments one at a time, where each win knocks down the next, rather than going broad all at once.

A short interim raise that funds a company between two larger rounds, usually to extend runway to a milestone.

Openly sharing a startup's progress, revenue, and failures as it grows, used by many bootstrappers and indie hackers to build an audience and trust.

Net cash burned divided by net new ARR, measuring how much a startup spends to generate each dollar of new recurring revenue.

The amount of cash a company spends each month beyond what it earns, used to track how fast reserves are being depleted.

The total sales and marketing cost to acquire one new customer, most useful when compared against LTV.

The number of months it takes to recover the cost of acquiring a customer from that customer's gross-margin revenue.

A record of who owns equity in a company, including founders, employees, and investors, and in what proportions.

The gap between early adopters who buy on vision and the mainstream pragmatists who need proof, where many startups stall, named after Geoffrey Moore's book.

The percentage of customers or revenue lost over a given period, usually monthly or annually, and a core signal of retention health.

A period at the start of a vesting schedule, commonly one year, during which no equity vests, after which the first chunk vests at once.

The direct costs of delivering a product or service, subtracted from revenue to calculate gross margin.

The percentage of people who take a desired action, such as signing up or buying, out of those who had the chance to.

A short-term loan to a startup that converts into equity at a later funding round, typically carrying interest, a maturity date, and a valuation cap.

Cost per acquisition, cost per click, and cost per thousand impressions, three standard ways of pricing and comparing paid marketing.

The instruction in a piece of marketing that tells the reader what to do next, such as start a free trial or book a demo.

The percentage of people who click a link out of those who saw it, used to gauge how compelling an ad or message is.

A framing from Paul Graham asking whether, on current revenue and growth, a startup would reach profitability before its cash runs out (alive) or not (dead).

The event ending an accelerator program where founders pitch their startups to an audience of investors.

The reduction in existing shareholders' ownership percentage when a company issues new shares, usually during a funding round.

A percentage reduction on the share price that a convertible note or SAFE holder gets when their instrument converts, rewarding them for investing early.

A funding round priced at a lower valuation than the previous one, which dilutes existing holders and signals trouble.

The investigation an investor or acquirer runs into a company's finances, legal standing, and operations before committing.

A customer who buys a new product early on the strength of its vision and potential, before the mainstream market is convinced.

Ownership in a company, usually represented as shares.

A reserved block of equity set aside to grant to employees as part of their compensation.

The event through which founders and investors realise the value of their ownership, typically an acquisition, merger, or IPO.

The earliest informal funding a founder raises from people who back them personally rather than on the numbers.

A growth model where each happy customer feeds the next through referrals, word of mouth, and expansion, so momentum compounds instead of restarting like a funnel.

The degree to which a founding team's background and insight match the problem and market they are tackling.

A model offering a basic product free while charging for premium features or capacity.

A share count that includes all issued shares plus everything that could become shares, such as options and convertible instruments.

The linear path a prospect moves through from awareness to purchase, where some drop off at each stage and the rest convert.

The strategy for how a company will reach customers and sell its product.

The percentage of revenue left after direct costs, where healthy SaaS sits around 70 to 85 percent and signals scalability.

Using low-cost, unconventional, fast-moving tactics to grow a user base or revenue quickly.

A self-feeding cycle where the output of one user's activity (content, referrals, data) becomes the input that draws in the next, the engine behind a flywheel.

The percentage of recurring revenue retained from existing customers excluding any expansion, capped at 100 percent.

A growth curve that stays flat then bends sharply upward, the shape investors hope to see in projections.

A precise description of the type of customer a product serves best, detailed enough to guide who to target and what to say to them.

An organisation that supports very early startups with workspace, resources, and guidance, usually without a fixed end date.

A founder, often solo, who builds and runs a small profitable software business independently rather than raising venture capital.

The first sale of a company's shares to the public, a common way to raise significant capital and provide an exit.

The path where a startup's value or cash position dips before it climbs, reflecting early investment ahead of returns.

A specific measurable metric a company uses to track progress toward a goal, varying by business and stage.

The investor who sets the terms and contributes the largest share in a funding round, with others following.

A methodology built on rapid iteration, customer feedback, and an MVP, aimed at learning fast and avoiding building things nobody wants.

An early, visible reference customer whose adoption puts a startup on the map and reassures more cautious buyers.

A term defining who gets paid first and how much when a company is sold or wound up, commonly set at 1x the investment, where higher multiples shift risk onto founders.

The total gross-margin revenue a customer is expected to generate before they churn, highly sensitive to the churn assumption used.

The ratio of customer lifetime value to acquisition cost, where 3:1 or higher is generally considered healthy.

The point at which the way a product is described lands clearly with its target market, so the promise matches what buyers actually want.

A clause letting an early investor claim better terms if the company later issues an instrument on more favourable terms.

A lead judged ready for sales attention based on marketing engagement (MQL) or after sales has confirmed genuine intent and fit (SQL).

The predictable revenue a subscription business earns each month, excluding one-time fees and non-recurring income.

The simplest version of a product that can be released to test core assumptions and gather customer feedback.

A contract binding parties to keep shared information confidential.

The percentage of recurring revenue retained from existing customers after expansion, contraction, and churn, where above 100 percent means the base is growing on its own.

The practice of expanding the employee option pool before a round so the dilution lands on founders rather than the incoming investor.

Growth that comes from reinvested revenue, word of mouth, and unpaid channels rather than paid acquisition or outside capital, central to the bootstrapping approach.

A fundamental change in a startup's product, market, or business model in response to what it has learned.

A model where the product itself drives acquisition, conversion, and expansion, often through free trials or freemium, rather than relying on a sales team.

The point at which a product clearly satisfies strong demand in a market, usually visible through retention and organic pull.

How a product is framed in the customer's mind relative to alternatives, covering who it is for, what it replaces, and why it is different.

A company's valuation including the new investment just raised.

A company's valuation before a new investment is added.

Selling a product before it is fully built, used to validate demand and fund development without outside capital.

The earliest funding stage, raised while founders are first getting an idea off the ground.

A growth efficiency measure comparing new and expansion revenue against churned and contracted revenue in a period.

A Paul Graham term for the point where a startup earns just enough to cover the founders' basic living costs, buying time to keep building without raising money.

ROAS is revenue earned per advertising dollar and helps run paid media; ROI is net return against total cost and helps judge whether growth is worth it.

A health check for SaaS where revenue growth rate plus profit margin should total at least 40 percent.

The number of months a company can keep operating at its current burn before it runs out of cash, with 18 to 24 months a common target.

An instrument giving an investor the right to equity in a future round, with no interest or maturity date, where a post-money SAFE makes ownership transparent at signing but dilutes only the founder if more are issued.

The portion of the total market a company could realistically serve with its current model and reach.

An early priced funding round that follows pre-seed and funds the search for product-market fit.

Successive priced equity rounds raised as a company scales, each typically larger and at a higher valuation than the last.

A business run alongside paid employment, a common low-risk way founders start and validate before going full-time.

Evidence that others trust or use a product, such as testimonials, case studies, and customer counts, used to reduce a buyer's hesitation.

A founder who builds and runs a business alone, without co-founders or employees.

The share of the serviceable market a company can realistically capture in the near term.

Ownership granted to founders or staff in exchange for work rather than cash.

The full revenue opportunity for a product or service if it captured the entire target market.

A non-binding document laying out the key terms of a proposed investment before formal legal agreements are drawn up.

How long it takes a new user to reach the first real benefit of a product, where shorter is better for activation and retention.

Evidence that a startup is gaining momentum, measured by paying customers, revenue, and retention over time.

A privately held startup valued at over one billion dollars.

The revenue and cost associated with a single unit of a business, such as one customer, used to judge whether the model can be profitable.

The maximum company valuation at which a convertible note or SAFE converts into equity, protecting early investors if the next round is priced higher.

A clear statement of the benefit a product delivers, for whom, and why it is better than the alternative.

A number that looks impressive but does not inform decisions or correlate with real value, such as raw signups or page views.

A form of financing where investors provide capital to high-growth-potential startups in exchange for equity and often an active role.

The schedule over which a person earns their granted equity, designed to reward people for staying.

The order in which proceeds are distributed to shareholders during an exit, determined by liquidation preferences and share classes.

A sharp, narrow offer that solves one acute pain for one buyer group, used to win a first foothold before broadening the product.

A comparison of a metric against the same period in the prior year to show longer-term trends.

A company that survives but neither grows meaningfully nor dies, generating just enough to keep going without reaching scale or exit.