VC Glossary

Every term founders need to know, explained simply.

All Fundraising Legal Metrics Operations

A

ARR (Annual Recurring Revenue)The annualized value of recurring subscription revenue, used as the primary growth metric for SaaS companies.Metrics

B

Burn RateThe rate at which a startup spends cash each month, used to calculate how long the company can operate before needing more funding.Metrics

C

CAC (Customer Acquisition Cost)The total cost of acquiring a new customer, including sales, marketing, and related overhead.Metrics Churn RateThe percentage of customers or revenue lost over a given period, serving as the inverse measure of retention.Metrics

D

DAU / MAUDaily Active Users and Monthly Active Users, measuring product engagement and the percentage of users who return regularly.Metrics

G

GMV (Gross Merchandise Value)The total value of goods or services sold through a marketplace, before deducting fees, returns, or costs.Metrics Gross MarginRevenue minus the direct costs of delivering the product, expressed as a percentage of revenue.Metrics

L

LTV (Customer Lifetime Value)The total revenue expected from a customer over the entire duration of their relationship with the company.Metrics

M

MRR (Monthly Recurring Revenue)The predictable monthly revenue from active subscriptions, serving as the building block for ARR and growth analysis.Metrics

N

Net Revenue Retention (NRR)The percentage of revenue retained from existing customers over a period, including expansions and contractions.Metrics NPS (Net Promoter Score)A customer satisfaction metric measuring how likely users are to recommend the product, scored from -100 to 100.Metrics

P

Payback PeriodThe number of months it takes to recoup the cost of acquiring a customer through their revenue contributions.Metrics

T

Take RateThe percentage of each transaction that a marketplace or platform retains as revenue.Metrics TAM / SAM / SOMA three-level framework for sizing a market: Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market.Metrics

U

Unit EconomicsThe direct revenues and costs associated with a single unit of the business, proving whether the core model is profitable.Metrics