Founder glossary

The terms that show up in an investor email or a cofounder conversation and send you to a search box. Definitions first, then the part that actually matters — what founders get wrong about each one.

Burn rate

How much money the company loses per month — gross burn is total spend, net burn is spend minus revenue.

Cap tableCapitalisation table

The record of who owns what percentage of the company, including shares not yet issued.

Churn

The rate at which existing customers stop paying, usually expressed per month.

Dilution

The reduction in your ownership percentage when new shares are issued.

DPAData Processing Agreement · Data Processing Addendum

A contract governing how one company handles personal data on another's behalf — required under GDPR whenever a processor touches a controller's data.

ICPIdeal Customer Profile

A description of the specific kind of customer your product fits best, precise enough that it rules people out.

Pre-money and post-money valuation

Pre-money is what the company is agreed to be worth before an investment lands; post-money is that number plus the money invested.

Product-market fitPMF

The point at which the market pulls the product out of you rather than you pushing it at the market.

Runway

How many months the company can operate before the money runs out, at the current rate of spending.

SAFESimple Agreement for Future Equity

An investment contract where money goes in now and converts to shares later, at the terms of a future priced round.

Term sheet

A short, mostly non-binding summary of the terms of a proposed investment, signed before the full legal documents are drafted.

Vesting cliff

The period at the start of a vesting schedule during which you earn nothing at all — leave before it, and you keep zero.