The Founder's Startup Dictionary
A quick reference for every metric, legal term, and financial instrument you need to know, from A-Z.
Accelerator
A fixed-term, cohort-based program designed to speed up early-stage growth
Angel Investor
Angel Investors provide early-stage funding using personal wealth for equity
Annual Recurring Revenue (ARR)
The total yearly value of your subscription contracts; the SaaS "North Star."
ASA (Advanced Subscription Agreement)
UK startup funding agreement ensuring SEIS/EIS tax relief for investors
B2B
Selling products or services directly to other companies, not consumers
B2C
Selling directly to individual customers; high volume, lower price point
Bootstrapping
Building a startup using personal savings and revenue, not investor cash
Bridge Round
Interim funding to keep the company alive between major rounds
Burn Rate
The speed at which your startup spends its cash reserves
Cap Table
A spreadsheet detailing exactly who owns your company's shares
Churn Rate
The percentage of subscribers who cancel or fail to renew
Due Diligence
The investigation investors perform before money changes hands
EBITDA
A measure of a company's overall financial performance and profitability
EIS (Enterprise Investment Scheme)
UK tax relief offering investors 30% back on their investment
EMI Scheme
The most tax-efficient way to give stock to UK employees
Equity Crowdfunding
Raising capital from the general public via online platforms
Exit Strategy
The pre-defined plan for how investors and founders will cash out
Flat Round
A funding round where the valuation remains unchanged from before
Freemium Model
A free product version used to convert users to paid
Growth Hacking
Data-driven, rapid experimentation to achieve massive, scalable user growth
Growth Margin
Revenue minus Cost of Goods Sold; measures product efficiency
Hockey Stick Growth
A revenue growth curve showing slow start then rapid vertical acceleration
Incubator
A program providing workspace and resources for very early-stage startups
IPO (Initial Public Offering)
A company's first sale of shares to the general public
Lead Investor
The main venture capital firm setting the terms and valuation
Liquidation Preference
The clause determining who gets paid first when the company sells
LTV (Lifetime Value)
The total revenue a single customer is expected to generate
MRR (Monthly Recurring Revenue)
The predictable revenue generated by subscriptions in a single month
MVP (Minimum Viable Product)
A basic product version used to gather early customer feedback
NDA (Non-Disclosure Agreement)
A legal contract protecting confidential information shared between parties
Option Pool
Shares reserved for future employees, reducing founder equity early on
Pivot
A structured course correction based on validated learning and data
Post-Money Evaluation
The company's value immediately after an investment is made
Pre-Money Valuation
The agreed-upon value of a company before any new investment
Product-Market Fit (PMF)
A strong market need for a product; the key startup milestone
R&D Tax Credits
A cash rebate from HMRC for innovative development costs
ROFR (Right of First Refusal)
A legal right to buy shares before they are offered externally
Runway
The time until a startup runs out of cash, typically 18 months
SaaS (Software as a Service)
Software delivered over the internet on a subscription basis
SAFE Note
A simple agreement for future equity, not a debt instrument
Seed Round
The first significant structured funding to build the initial team
SEIS (Seed Enterprise Investment Scheme)
UK tax scheme offering investors 50% tax relief on seed investment
Series A
The first major VC round for proven products ready to scale
Tag-Along Rights
A minority shareholder's right to join a founder's stock sale
TAM, SAM, SOM
A framework for sizing market opportunity: Total, Serviceable, Obtainable
Term Sheet
A non-binding summary of the main financial and legal deal terms
Unicorn
A privately held startup valued at $1 billion or more
Valuation Cap
A ceiling on valuation for converting early investor's notes
Vesting Cliff
A period where equity is earned only after a specific milestone
Vesting Schedule
The timeline and process for earning full ownership of equity
