Startup 101

High-net-worth individual who provides financial backing to early-stage startups, typically in exchange for equity or convertible debt.

A key metric for subscription-based businesses, representing the predictable revenue a company expects to receive on an annual or monthly basis.

A subfield of marketing focused on rapid experimentation across marketing channels and product development to identify the most efficient ways to grow a business.

The rate at which a startup spends its cash reserves to finance overhead before generating positive cash flow from operations, typically measured monthly, to gauge runway before needing more funding.

A spreadsheet or table that details the equity ownership of a company, listing all shareholders and the number and type of shares they hold.

A form of short-term debt that converts into equity, typically in conjunction with a future financing round.

The total cost of acquiring a new customer, including marketing, sales, and related expenses, divided by the number of customers acquired.

The percentage of customers or subscribers who stop using a product or service within a given period, indicating retention challenges. A high churn rate is a major red flag for subscription businesses.

The reduction in ownership percentage of existing shareholders caused by the issuance of new shares.

A fundraising round where the startup is valued at a lower price per share than in a previous round, indicating a decrease in the company's valuation.

Shares of ownership in a company.

A founder's plan to sell their ownership stake in the company to investors or another company. Common exits include an IPO, acquisition, or merger.

A strategy outlining how a company will deliver its product to customers, including pricing, distribution, and marketing tactics.

The simplest version of a product that can be released to test a business idea with minimal resources, allowing for quick feedback and iteration.

A phenomenon whereby a product or service becomes more valuable as more people use it (e.g., social media platforms, marketplaces).

A block of shares reserved for issuance to employees, executives, and advisors as equity compensation.

A fundamental change in a startup's strategy, often involving a shift in its business model, product, or target market, in response to feedback or market changes to improve chances of success.

The degree to which a product satisfies strong market demand. Achieving PMF is a critical milestone for early-stage startups.

An early-stage demonstration or pilot project used to verify that a certain concept or theory has the potential for real-world application.

A financing contract that grants an investor the right to receive equity in the company at a future date, typically during the next priced funding round. Unlike a convertible note, it is not a debt instrument.

The overall revenue opportunity available for a product or service if 100% market share were achieved, helping assess market potential.

A key term in a SAFE or convertible note that sets the maximum valuation at which the investor's money will convert into equity, protecting early investors from dilution in a high-growth scenario.