Startups

Scaling is growth in which revenue rises faster than costs, so each extra customer adds more profit. In plain growth, costs rise at the same pace as revenue.

An MVP (minimum viable product) is the smallest version of a product real customers can use, built to learn whether they want it before you build all of it.

Equity is ownership of a company, measured in shares and percent. On a balance sheet the same word means book equity: what the business owns minus what it owes.

Dilution is the fall in existing shareholders' percentage of a company when it issues new shares. The percentage drops, while the stake's value can rise.

A cap table (capitalization table) shows who owns how many shares and options in a company, and what percentage each holds on a fully diluted basis.

An option pool is a block of shares reserved for future employees' options. If it is created before the investor's money, existing shareholders pay for it.

Vesting is a schedule under which shares or options granted to you become yours to keep or exercise step by step, as long as you keep working for the company.

A pivot is a planned change of direction: a business changes one part of its model, such as the customer or the product, when evidence shows the plan fails.

Traction is evidence in numbers that real customers keep paying for or using a product, not just likes, followers or visits to a website.

TAM (total addressable market) is the revenue you would earn if every customer in the market you defined bought from you. It is a ceiling, not a sales forecast.

SAM (serviceable addressable market) is the part of TAM your business can actually reach, given its location, hours, language, licences and business model.

SOM (serviceable obtainable market) is the part of the market you can actually win with today's team, budget and hours. In a small business, capacity sets it.

A business model explains how a business makes money: who pays, for what, and why delivering it costs less than the price the customer pays.

The Business Model Canvas is a one-page template of nine blocks that shows how a business creates value, delivers it and earns from it.

Problem-solution fit is the point where you have evidence that customers feel a problem and want your way of solving it, before you build the product.

Product-market fit is when a product satisfies a real market so well that customers stay, come back and bring others without being pushed.

A moat is a lasting advantage that stops competitors from copying a business and taking its customers, such as switching costs, a network effect or lower costs.

A pitch deck is a short presentation for investors, usually about ten slides, with one goal: to earn a second meeting.

A term sheet is a short, mostly non-binding document with the key terms of an investment, such as amount, valuation, control and liquidation preference.

A SAFE (simple agreement for future equity) is a contract where an investor pays now and gets shares in the next priced round, with no valuation set today.

Pre-money valuation is the agreed value of a company just before new investment comes in. It sets the price per share and how many shares the investor receives.

Post-money valuation is a company's value right after a funding round: the pre-money value plus the new investment. It sets each investor's percentage.