The Ultimate Startup Terminology Guide: From A to Z

If you are new to the startup scene or raising capital, picking up all the startup terminology and acronyms can feel like learning a foreign language. It takes time to become familiar with these words. We put together this list of terms and their definitions that are important to know. When running your company, these terms will become second nature to you and an integral part of your operations.

Table of Contents

A

Accelerator

A business program that supports early-stage, high-growth, or high-potential companies with resources such as education, networking, mentorship, workspace, and financing. Similar to college programs, companies must apply to join an accelerator. They are accepted into the program as cohorts throughout the year.

Accounts Payable

Money owed to its creditors by a company.

Accounts Receivable

Money owed to a company by its debtors.

Accumulated Retained Earnings

Amount of net income left over for the business after all dividends have been paid to shareholders. Typically used to launch new products, increase efficiency, hire new employees, or buy back their shares. Sometimes a company may choose not to reinvest in the business and instead distribute these earnings back to the shareholders.

Angel Investor

This person provides seed capital to businesses in exchange for ownership equity. Most angels are looking for a higher-risk, higher-reward investment opportunity than they can find in traditional investments and invest in startups with ideas they believe in.

Assets

Any resource with value that you own or lease to help you run your business. Assets can be physical, such as office supplies and cash in the bank, or intangible, like your brand or reputation.

B

Beta

A phase in software that has lots of features but will likely contain many errors or bugs. A beta test is a chance to use software for low or no cost before being released to the general public.

Bookings

This metric refers to the value of the contracts signed with future customers (commitments to pay for services before payment has been collected).

Bootstrap

Bootstrap refers to a company operating solely on its owner's funds or the company's revenue without seeking external investments.

Burn Rate

A measure of cash flow that shows how quickly a company is spending money to cover its overhead costs. It is typically used by companies experiencing negative cash flow (spending more than they earn) to gauge the duration until they need to increase sales, reduce expenses, or raise capital.

C

CAC

Customer acquisition cost. The amount of money a business spends on sales and marketing efforts to get a new customer.

Cap Table

A capitalization table is a spreadsheet, table, or software that details who has ownership in a company.

Churn

In a subscription business, this is how many customers cancel their subscription monthly, quarterly, or annually.

CPC

Cost-per-click. This is a digital marketing metric measuring how much paid advertising costs on a per-click basis.

Crowdfunding

There are different types of crowdfunding, with the most common being Equity Crowdfunding. A company raises funds by selling a stake in the company to a number of investors in exchange for an investment.

D

Data Room

Information that teams provide investors during a due diligence (DD) process. The “room” isn't a physical space but rather some digital folder of documents, presentations, financial models, and any other documents that would help with the DD process.

DD

Due Diligence. An audit to verify the facts and figures about a business by a potential investor before investing.

Deferred Revenue

Advance payments a company receives for work to be performed in the future.

Depreciation

Depreciation is the decrease in the value of an asset over its lifespan.

E

Ending Cash

On the cash flows statement, ending Cash is the amount of cash a company has when adding the change in cash and beginning cash balance for the current fiscal period.

Equity Financing

Equity financing involves selling a portion of the company. The main advantage of equity financing is that there is no obligation to repay the money acquired through it.

Exit

An exit is a strategic plan devised to sell ownership in a company to investors or another company. It provides a means for a business owner to reduce or liquidate their stake in a business, potentially resulting in substantial profits if the business is successful.

F

Financial Model

A financial model represents a company's past, present, and future revenue and expenses to make business decisions that lead to growth and profitability.

Fractional

This means hiring someone specialized on a part-time, contractual basis.

G

G&A

General and administrative expenses. This includes everything to "keep the lights on" for a company like rent, utilities, office supplies, insurance, and legal fees.

Go-To-Market

A plan that helps businesses position a new product or service for launch, define their ideal customers, and coordinate messaging and sales strategy.

Gross

Income earned by a business before subtracting taxes and other expenses.

H

Home Office

A home office is a designated space within one's home where remote employees or self-employed individuals can work.

I

Incubator

A program that gives companies as early as the idea stage support, coaching, and a workspace to help them get to an MVP and go-to-market plan.

Investor Pipeline

A list of qualified investors targeted for investment, treated akin to a sales funnel.

Investor Relations

Managing relationships between the executive leadership of a company and its network of investors.

J

Joint Venture

A non-permanent collaboration between two parties who pool their resources and work together to achieve a specific business outcome.

K

KPI

Key Performance Indicator. An important high-level measure of revenue, profits, or other financial outcomes.

L

Liabilities

Liabilities encompass obligations owed by a company, including loans, deferred revenue, and accounts payable.

LTV

Lifetime value. This is an estimate of how much a customer will spend with you throughout their lifetime as a customer.

LTV/CAC Ratio

Lifetime value divided by customer acquisition cost.

M

MRR

Monthly recurring revenue. This is a key metric for SaaS companies to track and is simply Total Monthly Revenue - Churn.

MVP

Minimum Viable Product. A product with enough features to attract early adopters and validate a product idea early in the product development cycle.

N

Net

What is leftover from the "Gross" after taxes and other expenses are subtracted.

O

OKR

Objectives and Key Results. Defined, measurable goals that are tracked daily or weekly instead of monthly.

P

Pitch Deck

A slideshow presentation that is used to pitch your business plan to investors.

Pre-Seed

Sometimes called a "friends and family" round, this is usually the first round of startup funding.

Pricing Strategy

The process used to determine pricing. It is usually done by analyzing a combination of the value of a product, the competition, customer demand, the current market, and other factors.

Principal Repayment

A payment toward the outstanding balance of a loan, not the interest.

Q

Quota

A target that a company must hit, usually for a sales team and often based on either the number of units sold or revenue generated.

R

Revenue

Income generated by a business.

Revenue-Based Financing

A type of financing in which investors agree to provide capital to a business in exchange for a percentage of gross revenues.

Runway

The number of months a business can continue operating before it runs out of money.

S

SaaS

Software-as-a-Service. This type of business uses cloud-based apps online instead of downloads and is usually sold on a subscription basis.

SAFE

Stands for "Simple Agreement for Future Equity".

Series A, B, C

These are funding rounds typically following pre-seed/seed funding and angel investing. These are normally led by venture capital firms.

T

Tax Credits

An amount of money a business can subtract from the taxes owed to a government.

Top of Funnel (ToFu)

This is the earliest stage of a sales process where "leads" or potential customers are generated by attracting them to a business.

U

Unit Economics

Revenue and cost of a business measured on a per-unit basis.

Useful Life

How long an asset will remain in profitable service.

V

Valuation

Pre-money valuation is the estimated value of a company before a new investment is made. Post-money valuation is the pre-money valuation plus the new amount invested.

W

Wholesaler

A company that sells goods in bulk at low prices to a retailer planning to resell them at a markup.

WIP

Work-in-progress, or partially finished and awaiting completion.

Working Capital

All cash and assets a business has available after liabilities have been accounted for and subtracted.

X

Xenocurrency

Moment of honesty: the best and brightest here at Forecastr put our heads together and still couldn't think of a business term that starts with X, but we wanted to hit every letter of the alphabet in this blog post, so big shout out to ChatGPT for suggesting this one.

Y

Yield

The earnings generated by an investment over a period of time.

Yield Management

A pricing strategy meant to maximize business performance by adjusting prices based on predicted demand and other factors.

Z

Zero-Based Budgeting

A budgeting technique in which all expenses for a new fiscal period must be justified and started over from zero, instead of starting with the previous budget and making adjustments.

Zombie Company

This is a term for financially distressed companies that only earn enough money to cover their operating expenses and debt payments but need excess capital or bailouts to keep operating.

How Else Can We Help?

From A to Z, these are words you will frequently hear in this space and in a fundraising round. Having a solid understanding of these terms can help you grow your business and communicate effectively with teammates or investors.

Here at Forecastr, we are dedicated to helping you succeed, whether it be through financial modeling or incorporating new lingo. We will meet you wherever you are on the path of building your business.

If you would like to leverage the power of a financial model in goal-setting, fundraising, or operations, schedule a demo with our team. We will elevate your confidence as a founder.