Bootstrapping
Building the company with the founders’ own money and revenue, without outside investors.
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Startup to Unicorn
From bootstrapping to IPO: every word investors, lawyers and founders throw around, explained in one line each.
The valuation ladder
From idea to hectocorn.
- IdeaA problem worth solving and a founding team.
- StartupA registered company building and testing its product.
- SoonicornA fast-growing startup expected to reach a $1 billion valuation soon.
- UnicornA privately held startup valued at $1 billion or more.
- DecacornA private company valued at $10 billion or more.
- HectocornA company valued at $100 billion or more, sometimes called a super-unicorn.
And the funding rounds along the way
- BootstrappedFounders’ own money and early revenue
- Pre-seedFriends, family, angels, building the first version
- SeedAngels & seed funds, finding product-market fit
- Series AVCs, scaling what works
- Series B / CLarger VCs: expanding teams, markets, products
- Pre-IPOLate-stage & private equity
- IPOListing on a stock exchange
A–Z of startup terms
Speak investor, fluently.
Angel investor
An individual who invests their own money in an early-stage startup, usually in exchange for equity.
Venture capital (VC)
A fund that invests other people’s money in high-growth startups in exchange for equity.
Pre-seed / Seed
The first outside money, used to build the product and prove that customers want it.
Series A, B, C
Successive priced funding rounds, each usually larger, to scale a startup that has traction.
Bridge round
A short, smaller round to extend runway until the next major round.
Term sheet
A non-binding summary of the main terms of an investment, signed before the final agreements.
Due diligence
The investor’s check of your legal, financial and compliance records before investing.
CCPS
Compulsorily Convertible Preference Shares, the most common instrument used by Indian VCs.
CCD
Compulsorily Convertible Debentures, debt that must convert into equity later.
Convertible note / iSAFE
An investment that converts into shares at a later round, often at a discount or valuation cap.
Pre-money valuation
The value of the company just before new money comes in.
Post-money valuation
Pre-money valuation plus the new investment.
Dilution
The fall in existing shareholders’ percentage when new shares are issued.
Down round
A round raised at a lower valuation than the previous one.
Cap table
The table showing who owns how many shares and options in the company.
ESOP
Employee Stock Option Plan, the right for employees to buy shares later at a fixed price.
Vesting & cliff
Shares or options earned over time (often 4 years), with nothing earned before the cliff (often 1 year).
Sweat equity
Shares issued to directors or employees for know-how or value added, rather than cash.
Liquidation preference
Investors’ right to get their money back first if the company is sold or wound up.
Anti-dilution
A clause that protects an investor if later shares are issued at a lower price.
Burn rate
How much cash the company spends each month, net of income.
Runway
How many months the company can operate before cash runs out (cash ÷ monthly burn).
MRR / ARR
Monthly / Annual Recurring Revenue, predictable subscription revenue.
CAC & LTV
Customer Acquisition Cost and Lifetime Value. Healthy startups aim for LTV well above CAC.
Product-market fit
The point where a product clearly satisfies strong demand in a market.
Pivot
A major change in product or strategy based on what the market has taught you.
DPIIT recognition
Government recognition as a “startup” under Startup India, which unlocks tax, IP and procurement benefits.
Exit
How founders and investors realise value: acquisition, secondary sale or IPO.
IPO
Initial Public Offering, listing the company’s shares on a stock exchange.
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