Startup words, in plain English

A 409A valuation is an independent estimate of what one share of a private US company's common stock is worth, used to set the price at which employees can buy shares through stock options.

An 83(b) election is a form you send to the IRS (Internal Revenue Service), the United States tax agency, to be taxed on shares when you receive them.

Activation rate is the share of new sign-ups who reach the first action that shows they got real value, often called the aha moment, instead of trying once and leaving.

Anti-dilution terms protect an investor if your company later sells shares at a lower price than they paid, by lowering the price they effectively paid.

An API key is a password your app uses to reach another service through its API (application programming interface), and anyone who copies a secret key can act as you.

App store review is the check an app store runs on every new app and update before the public can download it.

ARR, short for annual recurring revenue, is your monthly recurring revenue multiplied by twelve: the yearly pace your subscriptions are on today.

Authentication is how your app checks who someone is: sign-up creates their account once, and login proves it is them each time they come back.

A backend is the part of your app that runs out of sight on a server, saving data and doing work the screen alone cannot do.

A board seat is a voting place on your company's board of directors, the group that legally approves big decisions like new funding, senior hires and a sale.

A bridge round is a smaller, faster raise that gives a company more time before its next larger round, usually on a SAFE (simple agreement for future equity).

Broad-based weighted average is the anti-dilution version that lowers an investor's price by an amount scaled to how big the cheaper new round is.

Burn multiple is the cash you burned in a period divided by the new annual recurring revenue you added in that same period.

Burn rate is how much more cash your company spends than it brings in each month, and runway is how many months your cash lasts at that pace.

CAC, short for customer acquisition cost, is your total spend on winning customers in a period divided by the new customers you gained in it.

CAC, short for customer acquisition cost, is what you spend to win one customer, and LTV, short for lifetime value, is what that customer pays you while they stay; putting the two side by side shows whether a customer pays back what it cost to win them.

The CAC payback period is how many months it takes what a customer pays, minus the direct cost of serving them, to earn back what you spent to win that customer.

A call to action (CTA) is the one thing a page, email or post asks the reader to do next, usually shown as a button or a link.

A cap table, short for capitalization table, is the record of who owns what share of your company, including founders, employees with stock options, and every investor.

A chargeback is when a customer asks their bank to reverse a card payment, and the money is pulled back from you while the dispute is decided.

Churn rate is the share of customers, or of revenue, that you lose in a set period, usually counted per month or per year.

A cliff is the first stretch of a vesting schedule during which no shares vest, so someone who leaves before it ends keeps nothing from that grant.

A co-founder equity split is how the founders divide ownership of the company between them, usually agreed when the company is set up.

A cohort is a group of customers who started at the same time, usually in the same month, tracked together so you can compare them with other groups.

The cold start problem is when a product only becomes useful once enough other people use it, so the first users find nothing there.

A convertible note is a loan to your company that turns into shares instead of being paid back, usually at your next priced round.

A custom domain is a web address you own, such as yourname.com, that opens your app instead of the default address your builder gave it.

Customer discovery is talking to people who might buy your product to learn how they experience the problem today, before you decide what to build.

A data room is the organized online folder of documents you share with investors or buyers during due diligence.

A database is an organized store where your app keeps its information, such as users, orders and messages, so it can find and change them later.

A dead cat bounce is a short-lived rise in a number that is falling overall, easy to mistake for a recovery.

A Delaware C corporation is a company formed under Delaware law and taxed as a regular corporation, a setup founders often meet when raising from United States investors.

Deploying your app means copying its latest version onto a server on the internet, so anyone with the link can use it.

Dilution is the drop in your ownership share that happens when your company issues new shares, even though the number of shares you hold stays the same.

A discount rate gives a SAFE (simple agreement for future equity) or convertible note holder the right to buy shares at a lower price than the next round's investors pay.

DNS, short for domain name system, is the internet's address book: it turns the web address people type into the location of the server that runs your app.

A down round is a funding round priced at a lower company value than the round before it.

A drag-along right lets a set majority of shareholders make the rest sell their shares on the same terms when the company is sold.

Due diligence is the check an investor or buyer runs on your company before a deal closes, confirming your finances, legal setup, ownership and the claims in your pitch.

An empty state is what a screen shows before there is anything to show, such as a new user's blank list of projects.

An exit survey is a short set of questions shown when a customer cancels or a trial ends, to learn the real reason they left.

A free tier is the part of a service you can keep using without paying, up to a limit and with no end date, unlike a free trial, which lets you use a paid plan for a set time, after which you pay or lose access.

A free trial lets a new customer use your paid product at no charge for a set time, after which they pay or lose access.

Full ratchet is the anti-dilution version that resets the price on all of an investor's earlier shares to any lower price the company later sells at, however small that sale.

Go-to-market, or GTM, is your plan for how a product reaches the customers it is built for: who they are, where you find them, what you say, and how they buy.

Hosting is the rented computer that keeps your app online, and if you build with an app builder, hosting is often included until you move the app somewhere else.

An ideal customer profile (ICP) is a specific description of the customer who gets the most value from your product, narrow enough to name real people who fit.

An indirect competitor is anything your customer uses today to solve the same problem in a different way, such as a spreadsheet, a freelancer or doing nothing.

A link preview is the card with a title, short description and image that appears when someone pastes your link into a chat or a social post.

A liquidation preference is an investor's right to get their money back before founders and employees are paid anything when the company is sold or shut down.

Localhost is your app running only on your own computer, while live means it runs on a server that anyone on the internet can reach.

LTV, short for customer lifetime value, is the total revenue you expect from a customer over the whole time they stay.

The LTV to CAC ratio compares a customer's lifetime value (LTV) with the customer acquisition cost (CAC) of winning them, usually as LTV divided by CAC.

MRR, short for monthly recurring revenue, is the subscription money you expect to collect every month from your current customers, and ARR, short for annual recurring revenue, is that number times twelve, so an MRR of 1,000 means an ARR of 12,000.

MRR churn measures how much monthly recurring revenue (MRR) you lost in a period, while logo churn counts how many customer accounts you lost.

An MVP, short for minimum viable product, is the smallest version of your product that can test, with real users, whether your main assumption is true.

A web app runs in a browser from a link, a native app is installed from an app store, and a web app is usually the faster first version.

Net revenue retention, or NRR, compares the recurring revenue you get today from a group of customers with what the same group paid a year earlier, counting upgrades, downgrades and cancellations.

Non-participating preferred stock makes an investor choose when the company is sold: take their money back, or convert to common shares and share the proceeds, but not both.

An onboarding funnel is the series of steps between a new user signing up and reaching activation, with some people dropping off at each step.

An option pool is a block of company shares set aside so future employees or advisors can be given the right to buy shares later at a fixed price.

Participating preferred stock lets an investor take their money back first when the company is sold, and then also share in whatever is left alongside everyone else.

A partner meeting is the internal meeting where the partners of a venture capital firm, which invests pooled money in startups, discuss your deal and decide whether to go ahead.

To take payments in your app, you connect a payment provider that handles the card details, through a checkout link on the web or the app store's own billing.

A pilot is a small, time-boxed trial with real customers, often paid, that tests whether they will use and value your product before you build or sell the full version.

A pitch deck is a short set of slides that tells an investor what problem you solve, for whom, why now, and why your team can win.

Post-money valuation is your company's agreed value right after a round closes, equal to the pre-money valuation plus the new money invested.

Pre-money valuation is what your company is agreed to be worth just before new investment comes in, and post-money valuation is that number plus the new money.

Pre-seed is the smallest and earliest outside money a startup raises, often from angels or small funds, usually before there is clear proof that customers want the product.

A seed round is usually the first sizeable outside money a startup raises to find a repeatable way to win customers; a pre-seed round is the smaller money before it, often to build and test the first version.

A privacy policy is a public page saying what personal data your app collects and who receives it.

Pro rata rights give an existing investor the option to invest again in a later round so they can keep the same ownership share.

Product-market fit (PMF) is when a clear group of people keep using your product and would miss it if it disappeared, shown by what they do, not what they say.

Protective provisions are veto rights that let investors block certain major company actions, such as raising money, taking on debt or selling the company.

A rate limit caps how many requests (calls from your app) a service accepts in a set time, and hitting one often explains errors when your app gets busy.

A registered agent is a person or company with a physical address in the state where your company is formed, named to receive legal papers on its behalf.

A retention curve shows what share of a cohort is still active at each week or month after they signed up.

Your riskiest assumption is the one belief your idea depends on most, which is the first thing to test because the whole plan fails if it is wrong.

Row-level security is a database rule that decides which rows each signed-in user can read or change, so one user cannot see another user's data.

SaaS, short for software as a service, is software people use online and pay for with a recurring subscription instead of buying it once.

A SAFE, short for simple agreement for future equity, is a contract where an investor gives your company money now for shares later, usually at your next priced round.

Server rendering means a page is built on the server before it reaches the visitor, while client rendering means the visitor's browser builds it after downloading the code.

A smoke test is a simple page or offer that describes a product before it exists and measures whether people take a real step, such as signing up or paying, to get it.

TAM, SAM and SOM are three sizes of your market: everyone who could ever buy (total addressable market), the part your product can actually serve (serviceable available market), and the part you can realistically win soon (serviceable obtainable market).

A term sheet is a short document listing the main terms of a proposed investment: how much money, at what valuation, and what rights each side gets.

Time to value is how long a new user takes to get the first real payoff your product promised, counted from sign-up.

Traction is evidence that people want your product, shown by what they do, such as coming back, paying, or bringing others.

Transactional email is the automatic one-to-one mail your app sends after a user does something, such as a sign-up confirmation, a password reset or a receipt.

Unit economics is the money you make or lose on one unit of your business, usually one customer or one order, after the costs tied directly to it.

UTM (urchin tracking module) tracking means adding short labels to the end of a link so your analytics can tell which post, email or ad sent each visitor.

A valuation cap is the highest company value a SAFE (simple agreement for future equity) will use when it turns into shares, even if your next round is priced higher.

A venture-scale business is one that could grow large enough to return a whole venture fund, which is the bar most venture capital investors use to decide.

Vesting is a schedule that lets a founder or employee earn their shares over time, and the cliff is the first stretch of it, when nothing is earned yet, so someone who leaves early keeps only the part that has already vested.

Vibe coding is describing an app in plain words and letting a tool write the code, which gets it built but cannot tell you if anyone needs it.

A waitlist is a list of people who left their contact details to hear when a product is ready, which shows interest but not a commitment to use or pay.

A warm intro is when someone an investor already knows and trusts introduces you to them, instead of you sending a cold email.

A webhook is a message another service sends to your app the moment something happens, such as a customer paying, so your app can react without having to ask.

A win-back sequence is a short series of timed emails meant to bring back customers who cancelled or trial users who never paid.

A wireframe is a rough sketch of a screen that shows what goes where and what happens next, without colors, images or final design.

A work made for hire is work whose copyright belongs to the employer or the person who commissioned it, rather than to the person who made it.