Plain language definitions for the terms you'll encounter in term sheets, investor meetings, and cap tables. No jargon, just clarity.
Annualized recurring revenue from subscriptions.
Average revenue per customer per month (usually).
Average annual contract value per customer.
Share of new users who reach a defined value moment.
Average transaction size on the platform.
Protection for investors if future rounds are at a lower valuation.
Cash outflow rate. Net burn = cash out - cash in (operational).
Net burn divided by net new ARR; efficiency of spend to growth.
Short-term funding to reach the next major milestone or round.
When revenue covers all expenses and the company stops burning cash.
Governing body that oversees company strategy, hires/fires the CEO, and approves major decisions.
Cost to acquire one new paying customer.
Share of customers or revenue lost in a period.
Debt that converts to equity under agreed conditions.
Revenue minus variable costs, before fixed costs.
Percent of a cohort retained at time checkpoints (D30, M3, etc.).
Record of all equity ownership in a company.
Risk from a large share of revenue depending on a few customers.
Reduction in ownership % when new shares are issued.
Investor investigation before finalizing investment.
Daily and monthly active users; ratio shows engagement stickiness.
Funding round at a lower valuation than the previous round.
Organized collection of company documents shared with investors during due diligence.
Right of majority shareholders to force minority shareholders to join a sale.
Percent of revenue retained excluding any expansion.
Revenue minus direct costs to deliver the product, as a share of revenue.
Total transaction value processed on the platform.
Strategy for how you reach, acquire, and retain customers.
Expected gross profit from a customer over their lifetime.
Value per $1 spent to acquire customers.
How efficiently supply meets demand on the platform.
Primary investor who sets terms and often takes a board seat.
Order and amount investors get paid before common shareholders in an exit.
Strategy of starting small within an account and growing revenue over time.
Normalized monthly subscription revenue.
Share of demand requests that find supply (or vice versa).
Sales efficiency: new ARR growth per $1 of prior S&M spend.
Clause ensuring investor gets best terms offered to others.
Revenue expansion minus revenue lost from churn/downgrades over a period.
Primary outcome that best reflects delivered customer value.
Value increases as more users join or content/data accumulates.
Customer satisfaction metric based on likelihood to recommend.
Months to recover CAC from gross profit.
Company valuation immediately before new investment.
Company valuation immediately after new investment.
Right of existing investors to maintain ownership % in future rounds.
Pipeline value relative to quota/target bookings.
Growth motion where product drives acquisition, activation, and expansion.
When your product satisfies strong market demand and customers actively retain and recommend.
Class of shares with special rights, typically held by investors.
Fundraise where shares are sold at a fixed price per share, setting a formal valuation.
Fundamental change in business strategy while keeping some elements of what was learned.
Months until cash is projected to run out.
Growth rate + profit margin; healthy if ≥ 40.
Annualized revenue divided by headcount; efficiency metric.
Percentage of customers who make more than one purchase.
Current revenue extrapolated to an annual figure.
Market sizing: total, served, and obtainable market.
Platform revenue as a share of GMV.
Median time for a new user to complete their first transaction.
Non-binding outline of proposed investment terms.
Evidence that customers want your product, measured through growth and engagement.
Right of minority shareholders to join a sale initiated by majority shareholders.