MOIC (Multiple on Invested Capital)
Formula: MOIC = (Investment Value + Gains) / Initial Investment
Definition: Ratio of returns to initial investment.
IRR (Internal Rate of Return)
Definition: Annualized return an investor earns on an investment.
COGS (Cost of Goods Sold)
Formula: COGS = Beginning Inventory + Purchases - Ending Inventory
Definition: Direct costs associated with making a product.
NPS (Net Promoter Score)
Formula: NPS = % Promoters - % Detractors
Definition: Measures customer satisfaction and loyalty.
D2C (Direct-to-Consumer)
Definition: Business model where brands sell directly to customers.
B2B (Business-to-Business)
Definition: Companies selling products/services to other businesses.
B2C (Business-to-Consumer)
Definition: Companies selling products/services to individuals.
MRR (Monthly Recurring Revenue)
Formula: MRR = Subscription revenue per month
Definition: Revenue from subscriptions in a given month.
ARR (Annual Recurring Revenue)
Formula: ARR = MRR × 12
Definition: Yearly revenue generated from subscriptions.
Valuation
Definition: The financial worth of a startup based on funding and market position.
Dilution (Equity Dilution)
Definition: Decrease in ownership percentage when new shares are issued.
Convertible Note
Definition: A loan that turns into equity during a funding round.
Pre-Money Valuation
Definition: A startup’s valuation before a new investment.
Post-Money Valuation
Formula: Post-Money Valuation = Pre-Money Valuation + New Investment
Definition: A startup’s valuation after receiving an investment.
SAFE (Simple Agreement for Future Equity)
Definition: An investment contract that converts into equity in the future.
Term Sheet
Definition: A document outlining key deal terms between a startup and an investor.
Cap Table (Capitalization Table)
Definition: A record of company ownership, including shares and investors.
Vesting
Definition: Process where employees earn their shares over time.
Cliff
Definition: A period before equity starts vesting.
Pro Rata Rights
Definition: The right of an investor to maintain their percentage ownership.
Down Round
Definition: A funding round where a startup’s valuation decreases.
Bridge Round
Definition: Temporary funding to sustain operations before a major funding round.
Gross Profit
Formula: Gross Profit = Revenue - Cost of Goods Sold
Definition: Revenue left after deducting direct costs of production.
Operating Profit (EBIT - Earnings Before Interest & Taxes)
Formula: Operating Profit = Revenue - Operating Expenses
Definition: Profit after accounting for all operating expenses.
Net Profit Margin
Formula: Net Profit Margin = (Net Profit / Revenue) × 100
Definition: Measures how much profit a company makes after all expenses.
Break-even Point
Formula: Break-even = Fixed Costs / (Price - Variable Cost)
Definition: Sales volume needed to avoid losses.
ROI (Return on Investment)
Formula: ROI = (Net Profit / Investment Cost) × 100
Definition: Measures profitability of an investment.
Bootstrapping
Definition: A startup funding itself without outside capital.
Freemium Model
Definition: A business model where basic services are free but premium features cost money.
Viral Coefficient
Formula: Viral Coefficient = Referrals Per User × Conversion Rate
Definition: The rate at which new users join due to existing users.
Unit Economics
Definition: Revenue and cost per customer or unit.
Pivot
Definition: A major shift in a startup’s business model.
Unicorn
Definition: A privately held startup worth over $1 billion.
Decacorn
Definition: A privately held startup valued at over $10 billion.
Cockroach Startup
Definition: A startup that focuses on long-term survival rather than fast growth.
Blue Ocean Strategy
Definition: A strategy to create uncontested market space.
Red Ocean Strategy
Definition: A strategy to compete in an established industry.
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