Angel Investor
An individual who provides early-stage capital to startups, typically in exchange for equity. Angels often invest their own money and may also offer mentorship or introductions. They usually come in before institutional venture capital and are critical for getting many startups off the ground.
ARR (Annual Recurring Revenue)
The total recurring revenue a company expects to earn over a twelve-month period, normalised from monthly subscriptions. ARR is the north-star metric for SaaS businesses because it reflects predictable, repeatable income. Investors use it as a primary gauge of scale and growth trajectory.
ARPU (Average Revenue Per User)
The average amount of revenue generated per user or account over a given period. ARPU helps you understand how much value each customer brings and is essential for pricing decisions. Tracking ARPU over time reveals whether you are moving up-market or compressing value.
B2B
Business-to-business — a model where a company sells products or services to other businesses rather than individual consumers. B2B sales cycles tend to be longer but deal sizes are larger. Most enterprise SaaS companies operate in this space.
B2C
Business-to-consumer — a model where a company sells directly to individual end users. B2C products typically need high volume to succeed and rely heavily on brand, UX, and viral growth. Think consumer apps, e-commerce, and subscription boxes.
Bootstrapped
Building a company without external funding, relying solely on personal savings and revenue from customers. Bootstrapping gives founders full ownership and control but limits how fast you can scale. Many profitable software companies were bootstrapped from day one.
Burn Rate
The rate at which a startup spends its cash reserves, usually measured monthly. Gross burn is total spending; net burn subtracts any revenue. Knowing your burn rate is essential for calculating runway and planning your next fundraise.
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer, including marketing, sales, and onboarding expenses divided by the number of new customers gained. A healthy business needs CAC to be significantly lower than LTV. Tracking CAC by channel helps you double down on what works.
Churn Rate
The percentage of customers or revenue lost over a given period. High churn is a signal that your product is not delivering enough value to retain users. Reducing churn is often more impactful than increasing acquisition because it compounds over time.
Cohort Analysis
A method of grouping users by the time they signed up (or another shared characteristic) and tracking their behaviour over time. Cohort analysis reveals whether newer users retain better than older ones, helping you measure the real impact of product changes. It is one of the most honest ways to evaluate growth quality.
Decacorn
A privately held startup valued at over $10 billion. The term extends the unicorn metaphor to reflect an even rarer achievement. Examples have included companies like Stripe and SpaceX before they reached this threshold.
Freemium
A pricing model that offers a basic version of the product for free while charging for premium features, higher usage, or advanced tiers. Freemium lowers the barrier to adoption and can drive viral growth, but requires careful balance so the free tier demonstrates value without cannibalising paid plans.
Go-to-Market (GTM)
The strategy and plan for launching a product to its target audience, covering positioning, channels, pricing, and sales motions. A strong GTM strategy aligns product, marketing, and sales around a clear ideal customer profile. Getting GTM wrong is one of the most common reasons startups fail despite having a good product.
IPO (Initial Public Offering)
The process by which a private company offers shares to the public on a stock exchange for the first time. An IPO provides liquidity for early investors and employees and raises significant capital, but brings regulatory scrutiny and public reporting requirements. It is often considered the ultimate milestone for a venture-backed startup.
LTV (Lifetime Value)
The total revenue a business expects to earn from a single customer over the entire duration of the relationship. LTV is the counterpart to CAC — a viable business typically needs an LTV-to-CAC ratio of at least 3:1. Improving retention, expanding revenue, or increasing pricing all push LTV higher.
MRR (Monthly Recurring Revenue)
The predictable revenue a subscription business earns each month, excluding one-time fees. MRR is the heartbeat metric for SaaS — it moves faster than ARR and lets you spot trends in new sales, expansions, contractions, and churn week to week.
MVP (Minimum Viable Product)
The simplest version of a product that can be released to test a core hypothesis with real users. The goal is to learn as quickly and cheaply as possible, not to ship something polished. A good MVP answers one question: does anyone actually want this?
NRR (Net Revenue Retention)
The percentage of recurring revenue retained from existing customers over a period, including expansions, contractions, and churn. An NRR above 100% means your existing customer base is growing even without new sales. Top SaaS companies target NRR of 120% or higher.
Pivot
A fundamental shift in a startup's business model, product, or target market based on learnings from the market. Pivoting is not failure — it is a disciplined response to evidence that your current approach is not working. Many iconic companies, including Slack and Instagram, pivoted from their original ideas.
Pre-seed
The earliest stage of fundraising, typically used to validate an idea, build a prototype, or reach initial traction. Pre-seed rounds are usually small (under $1M) and come from angels, friends, family, or early-stage funds. The goal is to get enough momentum to raise a proper seed round.
Product-Market Fit (PMF)
The point at which a product satisfies a strong market demand, evidenced by organic growth, high retention, and customers who would be very disappointed if the product disappeared. PMF is the single most important milestone for an early-stage startup. Before you have it, nothing else scales; after you have it, everything gets easier.
Runway
The amount of time a startup can continue operating before it runs out of cash, calculated by dividing current cash by monthly net burn. Runway is measured in months and dictates when you need to fundraise, cut costs, or reach profitability. Most investors want to see at least 12-18 months of runway after a round closes.
SaaS (Software as a Service)
A software delivery model where applications are hosted in the cloud and accessed via subscription rather than installed locally. SaaS businesses benefit from recurring revenue, lower distribution costs, and continuous deployment. It is the dominant model in modern B2B software.
Seed Round
The first significant round of institutional funding, used to hire a small team, develop the product, and find product-market fit. Seed rounds typically range from $1M to $5M and come from seed-stage venture funds or syndicates. This is the stage where you prove your concept can become a real business.
Series A
The first major venture capital round after seed, typically raising $5M to $20M to scale a proven product and go-to-market motion. Series A investors expect clear evidence of product-market fit, strong unit economics, and a path to significant revenue growth. It marks the transition from finding a model to scaling it.
Series B
A growth-stage funding round, usually raising $15M to $50M or more, focused on scaling the business aggressively. By Series B, the company should have repeatable sales processes, strong retention, and a clear plan to capture market share. The capital typically goes toward hiring, expansion, and building out infrastructure.
Series C
A later-stage funding round for companies that have proven their business model and are scaling rapidly toward market dominance or an exit. Series C rounds can range from $50M to hundreds of millions and are often led by growth equity or crossover funds. At this stage the focus shifts to international expansion, acquisitions, or IPO preparation.
TAM / SAM / SOM
Three concentric measures of market size. TAM (Total Addressable Market) is the total demand for your product category. SAM (Serviceable Addressable Market) is the slice you can realistically reach with your business model. SOM (Serviceable Obtainable Market) is the portion you can capture in the near term. Investors use these to assess how big the opportunity can get.
Unicorn
A privately held startup valued at $1 billion or more. The term was coined because reaching this valuation was once considered extremely rare. While unicorns are more common today, achieving this milestone still signals exceptional growth and market position.
Venture Capital (VC)
A form of private equity financing where firms invest in high-growth startups in exchange for equity, betting on outsized returns. VCs typically invest at specific stages (seed, Series A, growth) and provide strategic support beyond capital, including network access and operational advice. VC funding is well-suited to businesses that need to scale quickly in winner-take-most markets.