Glossary

Those tricky finance abbreviations and fundraising lingo explained

19 articles in this collection
Written by John Brett

Unit Economics

What are 'Unit Economics'?

Unit economics are the P&L of a business reduced to a per unit basis. A unit is the fundamental driver of your business model.

Written by John Brett
Updated over a week ago

What is 'CAC payback'?

CAC payback is the number of months it takes to pay off the cost of acquiring a customer and to start making a profit from that customer.

Written by John Brett
Updated over a week ago

What is 'LTV:CAC'?

LTV:CAC ratio is a measure of profitability per customer.

Written by John Brett
Updated over a week ago

What is 'ARPU'?

The average revenue per unit/user/customer per month.

Written by John Brett
Updated over a week ago

What is 'LTV'?

Lifetime value (LTV) is the profit that you generate over the life of your customer's relationship with your business.

Written by John Brett
Updated over a week ago

What is 'CAC'?

Customer acquisition cost (CAC) is the amount of money that you spend on sales and marketing to acquire a customer.

Written by John Brett
Updated over a week ago

What is 'churn'?

Churn rate is a measure of the number of individuals or items moving out of a collective group over a specific period

Written by John Brett
Updated over a week ago

Fundraising lingo

Post- & Pre-Money Valuation

Describes the company's price before and after an investment

Written by John Brett
Updated over a week ago

Cashout

The point in time where cash exceeds the initial investment value

Written by John Brett
Updated over a week ago

Break-even

Break-even is the point of balance where your business is making neither a profit nor a loss.

Written by John Brett
Updated over a week ago

What is 'MRR'?

Monthly Recurring Revenue is revenue that is likely to continue to be generated regularly for a significant period of time

Written by John Brett
Updated over a week ago

What is 'ARR'?

Annual Recurring Revenue is revenue that is likely to continue to be generated regularly for a significant period of time

Written by John Brett
Updated over a week ago

What is 'burn rate'?

Burn rate is the company's total expenses and team costs as monthly average.

Written by John Brett
Updated over a week ago

What is 'runway'?

Runway describes how many months you have left where you’re able to cover all your costs.

Written by John Brett
Updated over a week ago

P&L + Balance Sheet terms

What is AOV?

Average Order Value

Written by John Brett
Updated over a week ago

Revenue

Revenue is the income that a business has from its normal business activities, usually from the sale of goods and services,

Written by John Brett
Updated over a week ago

What is 'Gross Margin'?

Gross margin is a company's net sales revenue minus its cost of goods sold (COGS)

Written by John Brett
Updated over a week ago

What is 'Gross Profit'?

Written by John Brett
Updated over a week ago

What is 'COGS' or 'COS'?

Cost of Goods Sold refers to the direct costs of producing the goods sold by a company.

Written by John Brett
Updated over a week ago