# Master the Metrics That Matter

196 financial, SaaS, fundraising, and ecommerce terms defined in plain english with formulas and real examples.

##

### 409A Valuation 
An independent appraisal of a private company's common stock fair market value, required for issuing stock options. [Cap Table & Equity](/content/terms/409a-valuation/index.html)

### A

### Accounts Payable (AP) 
Money a company owes to vendors and suppliers for goods or services received but not yet paid for. [Accounting](/content/terms/accounts-payable/index.html)  
### Accounts Payable Turnover 
How quickly a company pays its suppliers, indicating cash management practices and supplier relationships. [Accounting](/content/terms/accounts-payable-turnover/index.html)  
### Accounts Receivable (AR) 
Money owed to a company by customers who have received goods or services but haven't yet paid. [Accounting](/content/terms/accounts-receivable/index.html)  
### Accounts Receivable Turnover 
How efficiently a company collects payments from customers, measured by how many times receivables are collected annually. [Accounting](/content/terms/accounts-receivable-turnover/index.html)  
### Accrual Accounting 
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. [Accounting](/content/terms/accrual-accounting/index.html)  
### Accrued Expenses 
Expenses that have been incurred but not yet paid or recorded in the accounts. [Accounting](/content/terms/accrued-expenses/index.html)  
### Accrued Interest 
Interest that accumulates on convertible notes over time, typically converting to additional equity. [Fundraising](/content/terms/accrued-interest/index.html)  
### Activation Rate 
The percentage of new users who complete a key action indicating they've experienced the product's core value. [SaaS Metrics](/content/terms/activation-rate/index.html)  
### ACV (Annual Contract Value) 
The average annualized revenue per customer contract, normalizing multi-year deals to show yearly value. [Revenue Metrics](/content/terms/acv-annual-contract-value/index.html)  
### Amortization 
The systematic allocation of an intangible asset's cost over its useful life or legal life. [Accounting](/content/terms/amortization/index.html)  
### Anti-Dilution 
Protection that adjusts an investor's share price if the company later raises money at a lower valuation. [Fundraising](/content/terms/anti-dilution/index.html)  
### AOV (Average Order Value) 
The average dollar amount spent per order, calculated by dividing total revenue by total number of orders. [Ecommerce Metrics](/content/terms/aov-average-order-value/index.html)  
### ARPU (Average Revenue Per User) 
The average monthly or annual revenue generated per active user or account, calculated by dividing total revenue by total users. [Revenue Metrics](/content/terms/arpu-average-revenue-per-user/index.html)  
### ARR (Annual Recurring Revenue) 
The total value of recurring revenue normalized to a one-year period, calculated by multiplying MRR by 12. [Revenue Metrics](/content/terms/arr-annual-recurring-revenue/index.html)  
### Asset Turnover Ratio 
A measure of how efficiently a company uses its assets to generate revenue. [Financial Metrics](/content/terms/asset-turnover-ratio/index.html)

### B

### Balance Sheet 
A financial snapshot showing what a company owns (assets), owes (liabilities), and the residual value to shareholders (equity). [Accounting](/content/terms/balance-sheet/index.html)  
### Billings 
The amount invoiced to customers in a period, representing cash that will be collected regardless of revenue recognition timing. [Revenue Metrics](/content/terms/billings/index.html)  
### Board of Directors 
The governing body responsible for major company decisions, composed of founders, investors, and independent members. [Fundraising](/content/terms/board-of-directors/index.html)  
### Bookings 
The total value of new contracts signed in a period, representing committed future revenue regardless of when it will be recognized. [Revenue Metrics](/content/terms/bookings/index.html)  
### Break-Even Point 
The point where total revenue equals total costs, meaning the business is neither profitable nor losing money. [Unit Economics](/content/terms/break-even-point/index.html)  
### Bridge Financing 
Short-term funding to extend runway until the next equity round or specific milestone. [Fundraising](/content/terms/bridge-financing/index.html)  
### Bridge Round 
Short-term financing to extend runway until a larger funding round closes, typically from existing investors. [Fundraising](/content/terms/bridge-round/index.html)  
### Budget Model 
A structured financial plan that forecasts revenue and expenses over a defined period, used to guide spending decisions and track performance. [Forecasting](/content/terms/budget-model/index.html)  
### Burn Multiple 
A capital efficiency metric showing how much cash is burned to generate each dollar of new annual recurring revenue. [Unit Economics](/content/terms/burn-multiple/index.html)  
### Burn Rate 
The rate at which a company spends its cash reserves, typically measured as net cash spent per month. [Financial Metrics](/content/terms/burn-rate/index.html)

### C

### CAC (Customer Acquisition Cost) 
The total cost of acquiring a new customer, including all marketing and sales expenses divided by the number of new customers acquired. [Unit Economics](/content/terms/cac-customer-acquisition-cost/index.html)  
### CAC Payback Period 
The number of months required to recover the cost of acquiring a customer through their subscription payments. [SaaS Metrics](/content/terms/cac-payback-period/index.html)  
### Cap Table 
A spreadsheet showing who owns what percentage of a company, including all shares, options, and convertible instruments. [Fundraising](/content/terms/cap-table/index.html)  
### Capital Call (Drawdown) 
A GP's formal request for LPs to transfer a portion of their committed capital to fund investments or cover expenses. [Fundraising](/content/terms/capital-call-drawdown/index.html)  
### Capitalization Table 
A document showing company ownership, including all shareholders, share counts, ownership percentages, and security terms. [Cap Table & Equity](/content/terms/capitalization-table/index.html)  
### Carried Interest (Carry) 
The share of investment profits that fund managers receive as compensation, typically 20% of gains. [Fundraising](/content/terms/carried-interest-carry/index.html)  
### Cart Abandonment Rate 
The percentage of online shoppers who add items to their cart but leave without completing the purchase. [Ecommerce Metrics](/content/terms/cart-abandonment-rate/index.html)  
### Cash Basis Accounting 
An accounting method that records transactions only when cash is received or paid out. [Accounting](/content/terms/cash-basis-accounting/index.html)  
### Cash Conversion Cycle (CCC) 
The number of days between paying for inventory and collecting cash from customers. [Financial Metrics](/content/terms/cash-conversion-cycle/index.html)  
### Cash Flow 
The movement of money into and out of a business, showing actual liquidity rather than accounting profit. [Financial Metrics](/content/terms/cash-flow/index.html)  
### Cash Ratio 
The most conservative liquidity measure, comparing only cash and equivalents to current liabilities. [Financial Metrics](/content/terms/cash-ratio/index.html)  
### Cash Runway 
The number of months a startup can operate before running out of cash, calculated by dividing current cash by monthly net burn rate. [Financial Metrics](/content/terms/cash-runway/index.html)  
### Cash-on-Cash Return 
The ratio of annual cash income to total cash invested, measuring yield on actual dollars deployed. [Fundraising](/content/terms/cash-on-cash-return/index.html)  
### Chart of Accounts 
A categorized list of all accounts used to record financial transactions in the general ledger. [Accounting](/content/terms/chart-of-accounts/index.html)  
### Churn Rate 
The percentage of customers or revenue lost over a specific period, measuring how quickly you're losing business. [SaaS Metrics](/content/terms/churn-rate/index.html)  
### Clawback Provision 
A clause requiring GPs to return excess carried interest if later fund performance doesn't justify early distributions. [Fundraising](/content/terms/clawback-provision/index.html)  
### Cliff (Vesting) 
A waiting period before any equity vests, typically one year, protecting companies from early departures. [Cap Table & Equity](/content/terms/cliff-vesting/index.html)  
### COGS (Cost of Goods Sold) 
The direct costs of producing and delivering your product or service, subtracted from revenue to calculate gross profit. [Unit Economics](/content/terms/cogs-cost-of-goods-sold/index.html)  
### Cohort Analysis 
Grouping users by signup date and tracking their behavior over time to reveal trends and product improvements. [Forecasting](/content/terms/cohort-analysis/index.html)  
### Common Stock 
Basic ownership shares with voting rights but no special preferences, typically held by founders and employees. [Cap Table & Equity](/content/terms/common-stock/index.html)  
### Comparable Company Analysis 
A valuation method that determines company value by comparing financial multiples to similar public or private companies. [Fundraising](/content/terms/comparable-company-analysis/index.html)  
### Contraction Revenue 
Revenue lost when existing customers downgrade their plans or reduce usage, distinct from churn where customers leave entirely. [Revenue Metrics](/content/terms/contraction-revenue/index.html)  
### Contribution Margin 
The amount each sale contributes toward fixed costs and profit after subtracting variable costs directly tied to that sale. [Unit Economics](/content/terms/contribution-margin/index.html)  
### Conversion Discount 
A percentage reduction in share price that convertible investors receive when converting to equity. [Fundraising](/content/terms/conversion-discount/index.html)  
### Conversion Rate 
The percentage of visitors who complete a desired action, such as making a purchase or signing up for a service. [Ecommerce Metrics](/content/terms/conversion-rate/index.html)  
### Convertible Note 
A debt instrument that converts to equity in a future funding round, featuring interest accrual and a maturity date. [Fundraising](/content/terms/convertible-note/index.html)  
### Cost Per Acquisition (CPA) 
The marketing cost to acquire one new customer, measuring acquisition efficiency by channel or campaign. [Ecommerce Metrics](/content/terms/cost-per-acquisition/index.html)  
### Current Ratio 
A liquidity ratio measuring ability to pay short-term obligations with current assets. [Financial Metrics](/content/terms/current-ratio/index.html)  
### Customer Concentration 
The degree to which revenue depends on a small number of large customers. [Financial Metrics](/content/terms/customer-concentration/index.html)  
### Customer Health Score 
A composite metric combining usage, engagement, and sentiment signals to predict customer renewal likelihood. [SaaS Metrics](/content/terms/customer-health-score/index.html)  
### Customer Retention Rate 
The percentage of customers who continue doing business with you over a specific period, measuring loyalty and satisfaction. [Ecommerce Metrics](/content/terms/customer-retention-rate/index.html)

### D

### DAU/MAU Ratio 
The ratio of daily active users to monthly active users, measuring how frequently users engage with a product. [Growth Metrics](/content/terms/dau-mau-ratio/index.html)  
### Days Inventory Outstanding (DIO) 
The average number of days a company holds inventory before selling it. [Ecommerce Metrics](/content/terms/days-inventory-outstanding-dio/index.html)  
### Days Payable Outstanding (DPO) 
The average number of days a company takes to pay its suppliers and vendors. [Financial Metrics](/content/terms/days-payable-outstanding-dpo/index.html)  
### Days Sales Outstanding (DSO) 
The average number of days it takes to collect payment after a sale is made. [Financial Metrics](/content/terms/days-sales-outstanding-dso/index.html)  
### Debt Service Coverage Ratio (DSCR) 
A measure of available cash flow to pay current debt obligations, including both principal and interest. [Financial Metrics](/content/terms/debt-service-coverage-ratio-dscr/index.html)  
### Debt-to-Equity Ratio 
A measure of financial leverage comparing total debt to shareholders' equity. [Financial Metrics](/content/terms/debt-to-equity-ratio/index.html)  
### Deferred Revenue 
Money received from customers for services not yet delivered, recorded as a liability until the service is provided and revenue can be recognized. [Revenue Metrics](/content/terms/deferred-revenue/index.html)  
### Depreciation 
The systematic allocation of a tangible asset's cost over its useful life. [Accounting](/content/terms/depreciation/index.html)  
### Dilution 
The reduction in ownership percentage when new shares are issued, occurring during funding rounds and equity grants. [Fundraising](/content/terms/dilution/index.html)  
### Discount Rate (SAFE/Note) 
A percentage reduction on the next round's share price for SAFE or convertible note holders, rewarding early risk. [Fundraising](/content/terms/discount-rate-safe/index.html)  
### Discounted Cash Flow (DCF) 
A valuation method that estimates business value by projecting future cash flows and discounting them to present value. [Fundraising](/content/terms/discounted-cash-flow-dcf/index.html)  
### Distribution Waterfall 
The structured sequence determining how fund profits are split between LPs and GPs, including return of capital, preferred return, catch-up, and carried interest. [Fundraising](/content/terms/distribution-waterfall/index.html)  
### Double Trigger Acceleration 
Vesting acceleration that requires both a company acquisition AND termination of employment to trigger. [Cap Table & Equity](/content/terms/double-trigger-acceleration/index.html)  
### Down Round 
A funding round where the company raises money at a lower valuation than its previous round. [Fundraising](/content/terms/down-round/index.html)  
### DPI (Distributions to Paid-In) 
A fund performance metric showing actual cash returned to investors relative to invested capital. [Fundraising](/content/terms/dpi-distributions-paid-in/index.html)  
### Drag-Along Rights 
A provision allowing majority shareholders to force minority shareholders to join in the sale of a company. [Cap Table & Equity](/content/terms/drag-along-rights/index.html)  
### Dry Powder 
Committed but uncalled capital that a venture fund has available to deploy into new or existing investments. [Fundraising](/content/terms/dry-powder/index.html)  
### Due Diligence 
The comprehensive investigation of a company by potential investors or acquirers before completing a transaction. [Fundraising](/content/terms/due-diligence/index.html)

### E

### EBIT (Earnings Before Interest & Taxes) 
Operating profit before financing costs and taxes are deducted, showing how much money the core business generates. [Financial Metrics](/content/terms/ebit-earnings-before-interest-taxes/index.html)  
### EBITDA 
Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operational profitability excluding financing and accounting effects. [Accounting](/content/terms/ebitda/index.html)  
### Efficiency Score 
The ratio of net new ARR to sales and marketing spend, measuring how efficiently growth investment converts to revenue. [Unit Economics](/content/terms/efficiency-score/index.html)  
### Equity Dilution 
The reduction in existing shareholders' ownership percentage when new shares are issued. [Cap Table & Equity](/content/terms/equity-dilution/index.html)  
### Exercise Price (Strike Price) 
The price an option holder pays to convert options into shares, set at fair market value when granted. [Cap Table & Equity](/content/terms/exercise-price/index.html)  
### Exit Multiple 
The ratio of exit proceeds to original investment, showing how many times the invested capital was returned. [Fundraising](/content/terms/exit-multiple/index.html)  
### Expansion Revenue 
Additional revenue generated from existing customers through upsells, cross-sells, and increased usage beyond their original purchase. [Revenue Metrics](/content/terms/expansion-revenue/index.html)

### F

### FCF Margin 
Free cash flow as a percentage of revenue, measuring how efficiently a company converts revenue into actual cash. [Financial Metrics](/content/terms/fcf-margin/index.html)  
### FCF Yield 
Free cash flow divided by market capitalization or enterprise value, measuring how much cash a company generates relative to its valuation. [Financial Metrics](/content/terms/fcf-yield/index.html)  
### Feature Adoption Rate 
The percentage of users actively using a specific feature, measuring whether features deliver value. [SaaS Metrics](/content/terms/feature-adoption-rate/index.html)  
### Fixed Asset Turnover 
How efficiently a company uses its fixed assets (property, equipment) to generate revenue. [Accounting](/content/terms/fixed-asset-turnover/index.html)  
### Free Cash Flow (FCF) 
The cash remaining after operating expenses and capital expenditures, available for dividends, debt repayment, or reinvestment. [Financial Metrics](/content/terms/free-cash-flow/index.html)  
### Freemium Conversion Rate 
The percentage of free users who upgrade to paid plans, measuring the effectiveness of a freemium model. [SaaS Metrics](/content/terms/freemium-conversion-rate/index.html)  
### Fully Diluted Shares 
The total number of shares that would exist if every option, warrant, and convertible instrument were exercised. [Cap Table & Equity](/content/terms/fully-diluted-shares/index.html)  
### Fund of Funds 
An investment fund that invests in other venture capital or private equity funds rather than directly in companies. [Fundraising](/content/terms/fund-of-funds/index.html)  
### Fund Vintage 
The year a venture fund began investing, used to compare performance across different market cycles. [Fundraising](/content/terms/fund-vintage/index.html)

### G

### GAAP (Generally Accepted Accounting Principles) 
The standardized set of accounting rules and conventions used to prepare financial statements in the United States. [Accounting](/content/terms/gaap-generally-accepted-accounting-principles/index.html)  
### General Ledger 
The master record containing all financial transactions organized by account. [Accounting](/content/terms/general-ledger/index.html)  
### General Partner (GP) 
The fund managers who make investment decisions, manage portfolio companies, and have unlimited liability. [Fundraising](/content/terms/general-partner-gp/index.html)  
### Goodwill 
An intangible asset representing the excess paid to acquire a business over the fair value of its identifiable assets. [Accounting](/content/terms/goodwill/index.html)  
### Gross Burn vs Net Burn 
Gross burn is total monthly spending; net burn is spending minus revenue, showing actual monthly cash consumption. [Financial Metrics](/content/terms/gross-burn-vs-net-burn/index.html)  
### Gross Margin 
The percentage of revenue remaining after subtracting direct costs of delivering the product, before operating expenses. [Unit Economics](/content/terms/gross-margin/index.html)  
### Gross Merchandise Value (GMV) 
The total value of goods sold through a platform before fees, returns, or cancellations are deducted. [Ecommerce Metrics](/content/terms/gross-merchandise-value/index.html)  
### Gross Profit Margin 
The percentage of revenue remaining after subtracting the direct costs of producing goods or services sold. [Accounting](/content/terms/gross-profit-margin/index.html)  
### GRR (Gross Revenue Retention) 
The percentage of recurring revenue retained from existing customers, excluding expansion revenue and only accounting for churn and contraction. [Revenue Metrics](/content/terms/grr-gross-revenue-retention/index.html)

### H

### Hurdle Rate (Preferred Return) 
The minimum return a fund must deliver to LPs before GPs can take their share of carried interest. [Fundraising](/content/terms/hurdle-rate/index.html)  
### Hype Ratio 
The ratio of company valuation to annual revenue, showing how much valuation is based on future expectations versus current performance. [Unit Economics](/content/terms/hype-ratio/index.html)

### I

### Income Statement (P&L) 
A financial statement showing revenue, expenses, and profit over a period, revealing whether the business made or lost money. [Accounting](/content/terms/income-statement/index.html)  
### Information Rights 
Investor rights to receive regular financial and operational updates from the company. [Fundraising](/content/terms/information-rights/index.html)  
### Interest Coverage Ratio 
A measure of how easily a company can pay interest expenses on outstanding debt. [Financial Metrics](/content/terms/interest-coverage-ratio/index.html)  
### Inventory Turnover 
How many times a company sells and replaces its inventory over a period, measuring inventory efficiency. [Ecommerce Metrics](/content/terms/inventory-turnover/index.html)  
### Inventory Turnover Ratio 
How many times a company sells and replaces its inventory during a period, measuring inventory management efficiency. [Accounting](/content/terms/inventory-turnover-ratio/index.html)  
### IRR (Internal Rate of Return) 
The annualized return rate that makes the net present value of all cash flows equal zero. [Fundraising](/content/terms/irr-internal-rate-of-return/index.html)

### J

### J-Curve 
The pattern where fund returns dip negative early due to fees and slow deployment, then turn positive as portfolio companies mature and exit. [Fundraising](/content/terms/j-curve/index.html)  
### Journal Entry 
A record of a single financial transaction with corresponding debit and credit entries. [Accounting](/content/terms/journal-entry/index.html)

### L

### Lead Velocity Rate (LVR) 
The month-over-month percentage growth in qualified leads, serving as a leading indicator of future revenue. [Growth Metrics](/content/terms/lead-velocity-rate/index.html)  
### Limited Partner (LP) 
Investors who provide capital to venture funds but don't participate in investment decisions. [Fundraising](/content/terms/limited-partner-lp/index.html)  
### Liquidation Preference 
The right of preferred shareholders to receive their investment back before common shareholders in a sale or liquidation. [Fundraising](/content/terms/liquidation-preference/index.html)  
### Logo Churn vs Revenue Churn 
Logo churn counts customers lost; revenue churn counts dollars lost. They reveal different aspects of retention health. [SaaS Metrics](/content/terms/logo-churn-vs-revenue-churn/index.html)  
### LTV (Lifetime Value) 
The total revenue a business expects to earn from a customer over the entire duration of their relationship. [Unit Economics](/content/terms/ltv-lifetime-value/index.html)  
### LTV:CAC Ratio 
The ratio comparing customer lifetime value to acquisition cost, indicating whether your unit economics support sustainable growth. [SaaS Metrics](/content/terms/ltv-cac-ratio/index.html)

### M

### Magic Number 
A sales efficiency metric measuring how much new ARR is generated for each dollar spent on sales and marketing. [SaaS Metrics](/content/terms/magic-number/index.html)  
### Management Fee 
The annual fee VC funds charge to cover operating expenses, typically 2% of committed capital. [Fundraising](/content/terms/management-fee/index.html)  
### Mark to Market 
Revaluing an asset to reflect its current market price rather than its original purchase price or book value. [Fundraising](/content/terms/mark-to-market/index.html)  
### Maturity Date 
The deadline by which a convertible note must be repaid or converted to equity. [Fundraising](/content/terms/maturity-date/index.html)  
### MOIC (Multiple on Invested Capital) 
Total value returned divided by total capital invested, expressing returns as a simple multiple. [Fundraising](/content/terms/moic-multiple-on-invested-capital/index.html)  
### Monthly Active Users (MAU) 
The count of unique users who engaged with a product at least once in the past 30 days. [Growth Metrics](/content/terms/monthly-active-users/index.html)  
### Monthly Burn Rate 
The amount of cash a company spends each month net of revenue, determining how long capital will last. [Financial Metrics](/content/terms/monthly-burn-rate/index.html)  
### Most Favored Nation (MFN) 
A provision guaranteeing an investor will receive terms at least as favorable as any subsequent investor receives. [Fundraising](/content/terms/most-favored-nation-mfn/index.html)  
### MRR (Monthly Recurring Revenue) 
The predictable revenue a subscription business expects to earn each month from active subscriptions. [Revenue Metrics](/content/terms/mrr-monthly-recurring-revenue/index.html)

### N

### Net Dollar Retention (NDR) 
The percentage of recurring revenue retained from existing customers over a year, including expansion and accounting for churn. [SaaS Metrics](/content/terms/net-dollar-retention/index.html)  
### Net New ARR 
The change in Annual Recurring Revenue over a period, accounting for new customers, expansion, contraction, and churn. [Revenue Metrics](/content/terms/net-new-arr/index.html)  
### Net Profit Margin 
The percentage of revenue remaining as profit after all expenses, taxes, and interest are paid. [Financial Metrics](/content/terms/net-profit-margin/index.html)  
### Net Working Capital 
The difference between current assets and current liabilities, measuring operational liquidity. [Financial Metrics](/content/terms/net-working-capital/index.html)  
### North Star Metric 
The single metric that best captures the core value a product delivers to customers, aligning company focus. [Growth Metrics](/content/terms/north-star-metric/index.html)  
### NPS (Net Promoter Score) 
A customer loyalty metric measuring willingness to recommend, calculated as the percentage of promoters minus detractors. [SaaS Metrics](/content/terms/nps-net-promoter-score/index.html)  
### NRR (Net Revenue Retention) 
The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn. [Revenue Metrics](/content/terms/nrr-net-revenue-retention/index.html)

### O

### Operating Cycle 
The total time from purchasing inventory to collecting cash from customers. [Financial Metrics](/content/terms/operating-cycle/index.html)  
### Operating Margin 
The percentage of revenue remaining after all operating costs, showing how efficiently a business converts revenue to operating profit. [Accounting](/content/terms/operating-margin/index.html)  
### Operating Profit Margin 
The percentage of revenue remaining after deducting operating expenses, showing profitability from core business operations. [Accounting](/content/terms/operating-profit-margin/index.html)  
### Option Pool 
A percentage of company equity reserved for future employee stock option grants, typically 10-20% of fully diluted shares. [Cap Table & Equity](/content/terms/option-pool/index.html)

### P

### Participating Preferred 
Preferred stock that receives its liquidation preference plus participates pro-rata in remaining proceeds with common shareholders. [Cap Table & Equity](/content/terms/participating-preferred/index.html)  
### Pay-to-Play Provision 
A requirement that investors participate in future funding rounds or face conversion of preferred stock to common stock. [Fundraising](/content/terms/pay-to-play-provision/index.html)  
### Payback Period 
The time required to recover customer acquisition cost from the gross margin a customer generates. [Unit Economics](/content/terms/payback-period/index.html)  
### Pipeline Coverage 
The ratio of total sales pipeline value to revenue target, indicating whether there are enough opportunities to hit quota. [Growth Metrics](/content/terms/pipeline-coverage/index.html)  
### Post-Money Valuation 
A company's valuation immediately after receiving new investment, equal to pre-money valuation plus new capital raised. [Fundraising](/content/terms/post-money-valuation/index.html)  
### Pre-Money Valuation 
A company's valuation before new investment is added, serving as the negotiation anchor in any fundraise. [Fundraising](/content/terms/pre-money-valuation/index.html)  
### Preferred Stock 
A class of stock with special rights including liquidation preference and anti-dilution protection, typically held by investors. [Cap Table & Equity](/content/terms/preferred-stock/index.html)  
### Prepaid Expenses 
Payments made in advance for goods or services to be received in future periods. [Accounting](/content/terms/prepaid-expenses/index.html)  
### Pro Rata Rights 
The right for existing investors to participate in future funding rounds to maintain their ownership percentage. [Cap Table & Equity](/content/terms/pro-rata-rights/index.html)  
### Product Qualified Lead (PQL) 
A user who demonstrates buying intent through product usage, predicting higher conversion likelihood than marketing leads. [SaaS Metrics](/content/terms/product-qualified-lead/index.html)  
### Profit Per Employee 
Net income divided by total employees, measuring how efficiently your team generates profit. [Financial Metrics](/content/terms/profit-per-employee/index.html)  
### Protective Provisions 
Veto rights given to preferred shareholders over specific major company decisions. [Fundraising](/content/terms/protective-provisions/index.html)

### Q

### Qualified Financing 
The minimum raise amount that triggers automatic conversion of convertible notes or SAFEs. [Fundraising](/content/terms/qualified-financing/index.html)  
### Quick Ratio (Acid Test) 
A stringent liquidity measure excluding inventory, showing ability to meet obligations with most liquid assets. [Financial Metrics](/content/terms/quick-ratio-acid-test/index.html)  
### Quick Ratio (SaaS) 
A growth efficiency metric comparing revenue added (new + expansion) to revenue lost (churn + contraction), showing net growth quality. [SaaS Metrics](/content/terms/quick-ratio-saas/index.html)

### R

### Receivables Turnover 
How many times per year a company collects its average accounts receivable balance. [Financial Metrics](/content/terms/receivables-turnover/index.html)  
### Repeat Purchase Rate 
The percentage of customers who make more than one purchase, indicating customer satisfaction and loyalty. [Ecommerce Metrics](/content/terms/repeat-purchase-rate/index.html)  
### Return on Assets (ROA) 
A measure of how efficiently a company uses its assets to generate profit. [Financial Metrics](/content/terms/return-on-assets-roa/index.html)  
### Return on Equity (ROE) 
A measure of how efficiently a company generates profit from shareholders' equity investment. [Financial Metrics](/content/terms/return-on-equity-roe/index.html)  
### Return on Invested Capital (ROIC) 
A measure of how efficiently a company uses all invested capital (debt and equity) to generate profits. [Financial Metrics](/content/terms/return-on-invested-capital-roic/index.html)  
### Return on Investment (ROI) 
The percentage gain or loss on an investment relative to its cost, measuring the efficiency of capital deployment. [Financial Metrics](/content/terms/return-on-investment-roi/index.html)  
### Return Rate 
The percentage of orders returned by customers, measuring product satisfaction and description accuracy. [Ecommerce Metrics](/content/terms/return-rate/index.html)  
### Revenue Concentration Risk 
The vulnerability created when a large percentage of revenue comes from a small number of customers or products. [Financial Metrics](/content/terms/revenue-concentration-risk/index.html)  
### Revenue Forecast 
Projecting future revenue based on current trends, pipeline, churn, and expansion assumptions. [Forecasting](/content/terms/revenue-forecast/index.html)  
### Revenue Per Employee 
Total revenue divided by headcount, measuring how efficiently your team generates top-line growth. [Financial Metrics](/content/terms/revenue-per-employee/index.html)  
### Revenue Recognition 
The accounting principle determining when revenue is recorded, based on when it's earned rather than when cash is received. [Accounting](/content/terms/revenue-recognition/index.html)  
### Revenue Run Rate 
An annualized projection of current revenue, calculated by multiplying recent monthly or quarterly revenue by 12 or 4 respectively. [Forecasting](/content/terms/revenue-run-rate/index.html)  
### Revenue-Based Financing 
Non-dilutive capital where repayment is a percentage of monthly revenue until a predetermined cap is reached. [Fundraising](/content/terms/revenue-based-financing/index.html)  
### Right of First Refusal (ROFR) 
The right to match any offer a shareholder receives before they can sell to a third party. [Cap Table & Equity](/content/terms/right-of-first-refusal-rofr/index.html)  
### ROAS (Return on Ad Spend) 
The revenue generated for every dollar spent on advertising, measuring the efficiency of paid marketing campaigns. [Ecommerce Metrics](/content/terms/roas-return-on-ad-spend/index.html)  
### Rule of 40 
A benchmark stating that a SaaS company's growth rate plus profit margin should equal or exceed 40% to be considered healthy. [SaaS Metrics](/content/terms/rule-of-40/index.html)  
### Runway 
The amount of time a company can continue operating at its current burn rate before running out of cash. [Financial Metrics](/content/terms/runway/index.html)  
### RVPI (Residual Value to Paid-In) 
The unrealized, paper value of a fund's remaining portfolio relative to invested capital. [Fundraising](/content/terms/rvpi-residual-value-paid-in/index.html)

### S

### SAFE (Simple Agreement for Future Equity) 
An investment agreement that converts to equity in a future funding round, featuring a valuation cap and/or discount without debt terms. [Fundraising](/content/terms/safe-simple-agreement-future-equity/index.html)  
### Sales Cycle Length 
The average time from first prospect contact to deal close, measuring how long the sales process takes. [Growth Metrics](/content/terms/sales-cycle-length/index.html)  
### Scenario Planning 
Creating multiple financial models with different assumptions to prepare for a range of possible futures. [Forecasting](/content/terms/scenario-planning/index.html)  
### Seat Expansion 
Growth in the number of paid users within existing customer accounts, a key driver of expansion revenue. [Revenue Metrics](/content/terms/seat-expansion/index.html)  
### Secondary Market (Private Equity) 
A marketplace where existing investors sell their fund stakes or company shares to new buyers before an IPO or fund liquidation. [Fundraising](/content/terms/secondary-market/index.html)  
### Secondary Sale 
A transaction where existing shareholders sell their shares to another buyer rather than the company issuing new shares. [Cap Table & Equity](/content/terms/secondary-sale/index.html)  
### Sell-Through Rate 
The percentage of inventory sold compared to what was received, measuring how quickly products move. [Ecommerce Metrics](/content/terms/sell-through-rate/index.html)  
### Seller's Discretionary Earnings (SDE) 
The total financial benefit a single owner-operator extracts from a business, used to value small businesses and startups. [Financial Metrics](/content/terms/sellers-discretionary-earnings/index.html)  
### Session Duration 
The average time users spend in your product per visit, measuring engagement depth. [Growth Metrics](/content/terms/session-duration/index.html)  
### Solvency Ratio 
A measure of a company's ability to meet long-term obligations and continue operating indefinitely. [Financial Metrics](/content/terms/solvency-ratio/index.html)  
### SPV (Special Purpose Vehicle) 
A legal entity created for a single investment, allowing multiple investors to pool capital into one deal. [Fundraising](/content/terms/spv-special-purpose-vehicle/index.html)  
### Stickiness (DAU/MAU) 
The ratio of daily to monthly active users, measuring how often users return and engage with your product. [Growth Metrics](/content/terms/stickiness-dau-mau/index.html)

### T

### Tag-Along Rights 
A provision allowing minority shareholders to join a sale if majority shareholders sell their stake. [Cap Table & Equity](/content/terms/tag-along-rights/index.html)  
### TCV (Total Contract Value) 
The total revenue value of a customer contract over its full term, including all recurring and one-time fees. [Revenue Metrics](/content/terms/tcv-total-contract-value/index.html)  
### Term Sheet 
A non-binding document outlining the key terms of a proposed investment before final legal documents are drafted. [Fundraising](/content/terms/term-sheet/index.html)  
### Time to Value (TTV) 
The duration between a user signing up and experiencing meaningful value from the product for the first time. [SaaS Metrics](/content/terms/time-to-value/index.html)  
### Trial Balance 
A report listing all account balances to verify that total debits equal total credits. [Accounting](/content/terms/trial-balance/index.html)  
### TVPI (Total Value to Paid-In) 
A fund performance metric showing total value (realized + unrealized) relative to invested capital. [Fundraising](/content/terms/tvpi-total-value-paid-in/index.html)

### U

### Unearned Revenue 
Payments received from customers for goods or services not yet delivered. [Accounting](/content/terms/unearned-revenue/index.html)  
### Unit Economics 
The analysis of revenue and costs at the individual customer or transaction level, determining whether each customer is profitable. [Unit Economics](/content/terms/unit-economics/index.html)

### V

### Valuation Cap 
The maximum valuation at which a SAFE or convertible note converts to equity, protecting early investors from excessive dilution. [Fundraising](/content/terms/valuation-cap/index.html)  
### Variance Analysis 
Comparing actual results to budget and investigating the reasons for differences to improve future forecasting. [Forecasting](/content/terms/variance-analysis/index.html)  
### Venture Debt 
Debt financing for venture-backed startups, typically used to extend runway between equity rounds without additional dilution. [Fundraising](/content/terms/venture-debt/index.html)  
### Vesting Schedule 
The timeline over which equity ownership is earned, typically 4 years with a 1-year cliff before any shares vest. [Cap Table & Equity](/content/terms/vesting-schedule/index.html)

### W

### Win Rate 
The percentage of sales opportunities that convert to closed won deals, measuring sales effectiveness. [Growth Metrics](/content/terms/win-rate/index.html)  
### Working Capital 
The difference between current assets and current liabilities, measuring ability to fund daily operations and meet short-term obligations. [Financial Metrics](/content/terms/working-capital/index.html)

### Z

### Zero-Based Budgeting (ZBB) 
Building budgets from scratch each period, requiring justification for every expense rather than adjusting historical spending. [Forecasting](/content/terms/zero-based-budgeting/index.html)

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