Basic Terms

Startup Bell
Apr 24
8 min read

Updated: Apr 26

Whether you're a founder building your first startup, an investor scanning pitches, or an aspiring entrepreneur trying to keep up — the business world comes with its own language. Understanding these terms isn’t just helpful — it’s essential.

This article is your go-to guide for all the basic (but powerful) business terms you’ll ever need. We’ve broken them down clearly, category by category — from funding lingo like “valuation” and “burn rate” to strategy terms like “pivot” and “product-market fit.”

Use Ctrl + F (or Cmd + F on Mac) to quickly find any term you're looking for.
Click on a term in the list to jump straight to a deeper explanation.

Bookmark this article as your go-to guide whenever business jargon pops up—in meetings, pitch decks, or articles. Never feel lost in the conversation again.

Startup & Business Basics

Startup – A company in its early stages of operation aiming for high growth.
SME (Small and Medium Enterprise) – A small or medium-sized business with limited revenue and number of employees.
Entrepreneur – Someone who starts and runs a business, taking on financial risks in hopes of profit.
Founder – The person who creates and starts a business (mainly startup).
Co-founder – A person who partners with the founder to start a business.
CEO (Chief Executive Officer) – The highest-ranking executive responsible for the overall operations and performance of the company.
CFO (Chief Financial Officer) – Executive responsible for managing financial actions and risks.
CMO (Chief Marketing Officer) – Executive responsible for marketing activities, strategies, and communications.
COO (Chief Operating Officer) – Executive responsible for day-to-day operations.
CTO (Chief Technology Officer) – Executive responsible for technological needs and research & development.
Cofounding Team – The group of people who start the business together.
Bootstrapping – Building a company without external capital.
Business Model – The plan for how a company will make money (e.g., subscription, freemium, SaaS).
Pivot – A major change in business direction or strategy.
MVP (Minimum Viable Product) – The most basic version of a product that solves the core problem, used to test the idea.
USP (Unique Selling Proposition) – What makes your product or business stand out.
Accelerator – A fixed-term program that supports startups through mentorship, education, and funding, usually ending with a demo day.
Incubator – An organization that helps startups grow by offering resources like office space, mentorship, and connections, usually over a longer period than an accelerator.
Pitch Deck – A brief presentation that outlines the business idea, team, market, and plan to attract investors.
Pre-Revenue – A stage where a company has not yet generated any sales or income.
Post-Revenue – A stage where a company has started generating sales income from its products or services.
Offshoring - Moving business operations to another country to reduce costs.
Outsourcing - Contracting work to external companies rather than doing it in-house.
Stealth Mode - A temporary state where a startup operates in secrecy to avoid competition.

Finance & Investment

Angel Investor – A wealthy individual who invests personal money in startups.
Revenue – Total income from sales before any costs or expenses.
ARR (Annual Recurring Revenue) – Total yearly subscription revenue.

ARR can inflate growth—$10/month becomes $120/year on paper even if customers churn next month.

MRR (Monthly Recurring Revenue) – Monthly version of ARR
Profit – Revenue minus all expenses.
ROI (Return on Investment) – Profit or loss relative to the investment
Gross Margin – (Revenue - Cost of Goods Sold) / Revenue. Is expressed as a percentage.
Net Margin – Profit after all expenses are deducted from revenue
Cash Flow – The movement of money in and out of a business.
Balance Sheet – Financial statement showing assets, liabilities, and equity.
Income Statement – Financial report showing profit/loss over a period.
Burn Rate – How fast a startup is spending money.
EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization.
Runway – How long your startup can survive at the current burn rate.
Valuation – The estimated worth of a business.
Equity – Ownership in a company, typically in the form of shares.
Dilution – Reduction in ownership percentage due to new shares issued.
Cap Table (Capitalization Table) – A spreadsheet showing who owns how much of the company.
M&A (Mergers & Acquisitions) – Consolidation of companies through various financial transactions.
Acqui-hire – An acquisition where the main goal is to acquire the team rather than the product or company itself.
Debt Financing – Borrowing money that must be repaid.
Equity Financing – Raising money in exchange for ownership.
Term Sheet – A non-binding agreement outlining the terms of an investment.
Convertible Note – A loan that can be converted to equity later.
SAFE (Simple Agreement for Future Equity) – A simple legal document to raise money without a valuation.
Venture Capital (VC) – Funding provided by investors to high-growth startups.
Seed Round / Series A/B/C – Funding rounds as a company grows.
Exit Strategy – How founders and investors plan to cash out (IPO, acquisition, etc.).
IPO (Initial Public Offering) – When a company first sells shares to the public.
Unicorn – A privately held startup valued at over $1 billion.
Decacorn - A privately held startup valued at over $10 billion.
Dragon – A startup that raises $1 billion in a single round of funding.
Pre-money Valuation – The value of a startup before new investment is added.
Post-money Valuation – The value of a startup after investment is added.
Sweat Equity – Ownership interest or increase in value created by work done rather than capital invested.
Crowdfunding – Raising small amounts of money from a large number of people, typically via platforms like Kickstarter or Indiegogo.
Bridge Loan – A short-term loan used to cover immediate costs until longer-term financing is secured.
Liquidation – The process of converting assets into cash, often in the event of a company winding down.
Lead Investor – The main investor who negotiates terms and sets the pace for a funding round.
Ramen Profitable - When a startup makes just enough money to cover the founders' basic living expenses.
Warrants - Options to purchase stock at a specific price within a certain timeframe.
Zombie Company - A company that earns just enough to continue operating and service debt but cannot pay off its debt.

Strategy & Planning

SWOT Analysis – Strengths, Weaknesses, Opportunities, Threats.
OKRs (Objectives and Key Results) – A goal-setting framework.
KPI (Key Performance Indicator) – A measurable value showing how well a company is achieving goals.
Go-to-Market (GTM) Strategy – Plan to launch and sell your product.
Business Plan – A document that outlines business goals and how to achieve them.
Product-Market Fit – When customers love your product and it satisfies a strong need.
North Star Metric – The one key metric that best shows your product's success.
TAM/SAM/SOM – Total Addressable Market/Serviceable Addressable Market/Serviceable Obtainable Market.
Traction – Evidence of customer demand and business model validation.
Moat – A competitive advantage that protects a business from rivals.
Marketplace – A platform where buyers and sellers transact, like Airbnb or Etsy.
Disruptive Innovation - A product or service that creates a new market and eventually disrupts an existing one.
First-mover Advantage - Benefits gained by the first company to enter a market.
Vertical Integration - When a company controls multiple stages of its supply chain.
Blue Ocean Strategy - Creating uncontested market space rather than competing in existing markets.

Marketing & Sales

ARPU (Average Revenue Per User) – Total revenue divided by number of users.
B2B/B2C/D2C – Business-to-Business/Business-to-Consumer/Direct-to-Consumer.
Branding – How your business is perceived by the public.
Sales Funnel – The journey from stranger to paying customer.
Lead – A potential customer.
Activation – The moment a user first experiences the value of your product (e.g., signs up and uses a key feature).
Evangelist – A person (often an employee or early adopter) who passionately promotes a product or brand to grow its user base.
CPA (Cost Per Acquisition) – Cost to acquire a paying customer.
CLTV (Customer Lifetime Value) – Total worth of a customer over time.
CTR (Click-Through Rate) – Percentage of people who click on a link/ad.
MQL/SQL – Marketing Qualified Lead/Sales Qualified Lead.

79% of marketing qualified leads never convert to sales, highlighting the need for better handoffs.

NPS (Net Promoter Score) – Measure of customer experience and loyalty.
Conversion Rate – Percentage of people who take a desired action.
Growth Rate – How fast the business is growing over time.
CAC (Customer Acquisition Cost) – Cost to get a new customer.
LTV (Lifetime Value) – Revenue a customer generates during their relationship with your business.
Churn Rate – Percentage of customers who stop using your product.
Retention – How well you keep customers coming back.
SEO (Search Engine Optimization) – Techniques to rank higher in search engines.
Bounce – When a visitor lands on a webpage and leaves without taking any further action.
Call to Action (CTA) – A prompt encouraging users to take a specific action, like “Sign up” or “Buy now.”
Stickiness – How often users return to use a product or how “habit-forming” it is.

Team & Culture

Advisory Board – Group providing strategic advice (not governance).
Board of Directors – A group of people elected to represent shareholders and guide the company.
C-Suite – Top senior executives (CEO, CFO, COO, etc.).
Cofounder Agreement – A formal document outlining roles and responsibilities.
Culture Fit – How well a candidate aligns with company values.
ESOP (Employee Stock Ownership Plan) – Giving employees a chance to own company shares, to align employee interests with company success.
Equity Compensation – Non-cash pay representing ownership.
Hiring Funnel – The stages of recruiting new team members.
Option Pool – Shares reserved for employee stock options.
Org Chart – Visual representation of company structure.
Severance – Compensation paid to an employee after they are let go, often based on tenure or employment terms.

Product & Tech

API (Application Programming Interface) – Connection between computers/software.
SaaS (Software as a Service) – Subscription-based software delivery model.
PaaS (Platform as a Service) – A cloud computing model where hardware and software tools are delivered over the internet.
Freemium – A business model offering basic services for free while charging for advanced features or add-ons.
DevOps – Development and IT operations integration.
Front-end/Back-end – Client-side/server-side of software.
No-code / Low-code – Platforms that allow building products without coding.
Proof of Concept (POC) – Exercise to verify a concept/theory is feasible.
Scalability – System's ability to handle increased load.
Scrum – A popular Agile framework using sprints.
Sprint – A short, fixed period to complete specific work.
Technical Debt – The cost of quick-and-dirty code that must be fixed later.
UI/UX – User Interface / User Experience.
Alpha Release – An early version of a product released to a limited internal audience for testing and feedback.
Beta Release – A product version shared with external users to identify bugs and gather real-world feedback before full release.
Open-source – Software whose source code is freely available for modification and redistribution.
Accessibility – The design of products, services, or environments to be usable by people with disabilities.
White-label – A product or service made by one company but rebranded and sold by another.
Sandbox – A safe testing environment for new software or features.

Legal & Compliance

Bylaws – Rules governing a corporation's internal management.
C-Corp/S-Corp – Corporate structures with different tax implications.
Cliff – Period before vesting begins.
Fiduciary Duty – Legal obligation to act in another party's best interests.
Incorporation – Formally creating a legal company.
Intellectual Property (IP) – Legal rights for inventions, trademarks, etc.
LLC (Limited Liability Company) – Business structure protecting owners from personal liability.
NDA (Non-Disclosure Agreement) – Legal contract to keep information confidential.
Operating Agreement – Document outlining ownership and member duties in an LLC.
Patent – A right granted for an invention.
Privacy Policy – How user data is collected and used.
Terms & Conditions – Rules for using a product or service.
Trademark – Protects brand names, logos, slogans.
Vesting – Process by which employees earn full rights to assets over time.
Escrow – A third party temporarily holds money or assets until a deal is completed.

Escrow services helped fuel the online real estate boom by protecting buyers and sellers on platforms like Zillow and Redfin.

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