Essential Tech Startup Terms
If you are exploring the world of startups, these are the 33 key terms every entrepreneur, investor, or team member should understand.
Validation & Survival
Everything that keeps a startup alive in the early months: proving the idea works and preventing cash from running out too soon.
1. MVP (Minimum Viable Product)
The simplest, functional version of a product built with only the core features needed to test whether people will actually use it and provide real feedback.
Example: An app that includes only the main feature, without any extras.
2. Product-Market Fit (PMF)
The point when a product solves a real, important problem for the market. Customers actively use it, pay for it, recommend it, and would miss it if it disappeared.
Example: Users adopt the app en masse, share it with friends, and complain loudly if the service is ever interrupted.
3. Cash Flow
The movement of money coming in and going out of the company’s bank account each month. When more money leaves than enters, there is a serious liquidity problem.
Example: R$5,000 came in from sales and R$4,000 went out in costs → R$1,000 positive cash flow.
4. Burn Rate
The amount of money a startup spends each month to operate, excluding any new investment inflows.
Example: Adding up salaries, rent, servers, and other bills, the company spends R$8,000 per month.
5. Runway
The number of months a company can survive with its current cash reserves. Calculated by dividing current cash by monthly burn rate.
Example: You have R$40,000 in the bank and burn R$8,000 per month → runway is 5 months.
6. CAC (Customer Acquisition Cost)
The average cost to acquire one paying customer. Add up all marketing and sales expenses and divide by the number of new customers gained in that period.
Example: Spent R$2,000 on ads and acquired 10 new customers → CAC = R$200 per customer.
7. LTV (Lifetime Value)
The total revenue a single customer generates for the company over the entire time they remain a customer.
Example: A customer pays R$50 per month and stays for an average of 12 months → LTV = R$600.
8. Break Even (Break-Even Point)
The moment when monthly revenue equals total costs. From that point onward, every additional real of revenue becomes profit.
Example: The company spends R$5,000 per month and starts generating R$5,000 in revenue → it has reached break-even.
9. Working Capital
The money needed to keep day-to-day operations running smoothly, covering delays in receivables, unexpected expenses, payroll, and other short-term needs.
Fundraising & Traction
Time to show concrete numbers that prove a startup’s potential and raise money to accelerate growth.
10. Traction
Real evidence that a startup is growing: increasing sales, users, active customers, retention, etc.
Example: The app sees more downloads and active users every month.
11. Pitch Deck
A concise presentation (usually 10-15 slides) that explains the problem, solution, market opportunity, traction, team, and business model to potential investors.
12. Cap Table (Capitalization Table)
A spreadsheet showing the ownership breakdown of the company (founders, co-founders, investors, and option pools).
Example: Founders own 80% and investors own 20%.
13. Equity
The percentage ownership stake each person or entity has in the company. It gets diluted as new investors come in.
14. Vesting
A schedule that determines when equity is fully earned, typically over 4 years with a 1-year cliff. It protects the company if someone leaves early.
Example: A co-founder only fully earns their shares after completing the agreed vesting period (standard: 4 years with 1-year cliff).
15. SAFE (Simple Agreement for Future Equity)
A simple, flexible investment contract (popularized by Y Combinator) where an investor provides capital now in exchange for the right to receive equity later, usually at a discount or valuation cap during a future priced round. SAFEs do not accrue interest or have a maturity date.
Example: An investor puts in R$100,000 today and converts it into equity in a future round with favorable terms.
16. Seed Round
The first formal fundraising round from angel investors or early-stage funds, typically used to build and validate the MVP. Involves giving up a portion of equity.
Example: Selling 10-20% of the company to raise initial institutional capital.
17. MRR (Monthly Recurring Revenue)
Predictable monthly revenue coming primarily from subscriptions or recurring contracts (does not include one-time sales).
18. Churn Rate
The percentage of customers who cancel or stop using the service each month (or year). High churn hinders sustainable growth.
Example: Out of 100 customers, 5 canceled in the month → Churn Rate = 5%.
19. Unit Economics
The revenue and profit (or loss) generated per customer or unit. Healthy unit economics usually means LTV significantly higher than CAC.
Example: CAC of R$100 and LTV of R$400 → strong unit economics.
Growth & Management
How to scale sustainably and professionalize the company.
20. ROI (Return on Investment)
The return generated for every real invested. Used to measure the effectiveness of marketing campaigns, product features, or hires.
Example: Invested R$1,000 in ads and generated R$3,000 in revenue → ROI = 200%.
21. Lean Startup
A methodology focused on building quickly, measuring results with real data, and learning from feedback to avoid wasting time and money on unwanted features.
Example: Launch a minimal version, gather feedback, and iterate constantly.
22. Bootstrapping
Growing the company using only its own resources or revenue from customers, without external investors. It gives more control but is usually slower.
23. B2B / B2C
- B2B (Business-to-Business): Selling to other companies.
- B2C (Business-to-Consumer): Selling directly to individual end consumers.
Example: Selling enterprise software to companies (B2B) vs. selling a streaming subscription to individuals (B2C).
24. NPS (Net Promoter Score)
A customer loyalty metric that asks: “On a scale of 0-10, how likely are you to recommend our product/service to a friend?” Scores above 50 are strong; below 0 signals serious issues.
25. OKRs (Objectives and Key Results)
A goal-setting framework with ambitious objectives and measurable key results to align and track team progress.
Example: Objective = Increase revenue; Key Result = Grow paying customers by 25% this quarter.
26. Startup
A new company designed for rapid, scalable growth with high risk and high potential reward. It’s not just any new business — it must have a repeatable, scalable business model.
27. Profit Margin
The percentage of revenue that remains after deducting all costs. Higher margins indicate better financial health and operational efficiency.
Example: Sell for R$100 with total costs of R$65 → R$35 profit → 35% profit margin.
28. Benchmarking
Comparing key metrics (growth, margins, churn, etc.) against similar companies or industry averages to identify strengths and areas for improvement.
29. Market Share
The portion of the total market that a company captures in terms of revenue, users, or volume.
Example: Total market size is R$1 million per year and the company generates R$120,000 → 12% market share.
30. Scale (Scaling)
The ability to grow revenue significantly without costs increasing at the same rate, usually through automation, efficient processes, and technology.
Example: Increasing revenue 10x without hiring 10x more people.
31. Value Added
The extra benefits a product or service provides beyond the basic offering, which justifies a higher price or stronger customer loyalty.
Example: 24/7 premium support, exclusive design, smart integrations, or personalized experience.
32. Diversification
Adding new products or entering new markets. This should usually happen only after the core product is proven and generating consistent traction.
Example: After succeeding with a personal finance app, launching complementary educational courses.
33. Spin-off (or Spin-out)
When an internal project, division, or technology from an existing company (or mature startup) is separated to become an independent new company.
Example: A feature or system built inside one company is turned into its own standalone startup.
These 33 terms form the essential vocabulary of the startup world. Understanding them will help you navigate conversations with founders, investors, and teams more confidently.