Entrepreneurship and Startups

104 flashcards by MentisLibrary

Product market fit, unit economics, and the term sheet clauses that decide who actually gets paid at an exit. Everything from SAFEs and liquidation preferences to burn multiple and CAC payback, with the formulas spelled out.

What is a startup?
A company designed to search for a repeatable and scalable business model under conditions of extreme uncertainty
What is product market fit?
The state where a product satisfies a strong market demand, shown by customers pulling the product from you rather than you pushing it
How is product market fit commonly measured?
Through retention curves that flatten, high organic growth, and survey based measures such as the percentage who would be very disappointed if the product disappeared
What is a minimum viable product, or MVP?
The smallest version of a product that lets the team learn the most about customers with the least effort
What is the build measure learn loop?
The lean startup cycle of building an experiment, measuring the result, and learning whether to persevere or pivot
What is a pivot?
A structured course correction to test a new fundamental hypothesis about the product, strategy, or growth engine
What is customer development?
A systematic process of getting out of the building to test hypotheses about customers, problems, and solutions before scaling
What is the mom test in customer interviews?
A rule for asking questions so specific and grounded in past behavior that even your mother could not give you a falsely encouraging answer
What is a business model canvas?
A one page template describing a business across nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure
What is a lean canvas?
A startup focused adaptation of the business model canvas replacing some blocks with problem, solution, key metrics, and unfair advantage
What is a value proposition?
A clear statement of the benefit a customer gets, for whom, and why it is better than the alternatives
What is a total addressable market, or TAM?
The total revenue opportunity available if a product achieved 100 percent market share
What is a serviceable addressable market, or SAM?
The portion of the TAM that your business model and geography can actually serve
What is a serviceable obtainable market, or SOM?
The share of the SAM you can realistically capture in the near term, given competition and your capacity
What is bottom up market sizing?
Estimating market size by multiplying the number of realistic customers by realistic revenue per customer
What is bootstrapping?
Funding a company from personal savings, revenue, or minimal outside capital, retaining full ownership and control
What is a pre seed round?
The earliest institutional or angel funding, typically raised on an idea, a team, and early prototype, before meaningful revenue
What is a seed round?
Early funding raised to find product market fit, typically after some initial traction
What is a Series A round?
The first major priced round, usually raised once a company has demonstrated product market fit and needs capital to scale a working model
What is a Series B round and beyond?
Growth rounds raised to scale a proven model: expand markets, build teams, and buy market share
What is a bridge round?
Interim financing to extend runway until a larger round or a milestone is reached
What is a down round?
A financing round at a lower valuation per share than the previous round
What is dilution?
The reduction of existing shareholders' ownership percentage when new shares are issued
What is pre money versus post money valuation?
Pre money is the company's value before new investment; post money is pre money plus the amount invested
What is a cap table?
A record of who owns what in the company: shares, options, warrants, and convertible instruments, with ownership percentages
What is a convertible note?
A short term loan that converts into equity at a future priced round, usually with a discount and often a valuation cap
What is a SAFE?
A Simple Agreement for Future Equity: a contract giving an investor the right to future shares, with no interest and no maturity date
What is a valuation cap?
A ceiling on the valuation at which a convertible instrument turns into equity, protecting the early investor from being diluted by a high priced round
What is a discount rate on a convertible instrument?
A percentage reduction on the next round's price per share, rewarding the earlier investor for taking earlier risk
What is a term sheet?
A non binding summary of the key terms of a proposed investment, which then guides the binding legal documents