Startup glossary: 50 words you’ll hear in your first year

Sooner or later someone will ask you, over a coffee at a startup event in Milan or on a video call with an investor in London, “What’s your runway?” Or “Is the option pool in the pre-money?” Nodding works once. The second question gives you away.

We built this startup glossary for the person who nods along in a meeting and looks the word up afterwards. It has fifty entries, all of them things you’ll hear in your first year, and each comes with a small example whose sum you can redo on a calculator. The last of the six groups holds the Italian terms nobody translates. Our map from zero to a first round is worth keeping open in another tab, because it puts these words in the order you’ll meet them. Not sure you’re even running a startup? Start with what a startup actually is.

How to use this startup glossary

Fifty entries is a lot to take in at once, so read the five that matter most (runway, equity, valuation, MVP and traction) and come back when another word trips you up. They come up in almost every first conversation. Each entry has its own anchor, which is why other guides on this site link straight to it.

• Money and funding rounds: 16 words, from bootstrapping to the data room
• Valuation and ownership: 13 words, pre-money to liquidation preference
• The numbers investors ask for: 9 words, all of them formulas
• Product and market: 5 words
• Pitch and team: 3 words
• Words you only hear in Italy: 4 words

Money and funding rounds

Bootstrapping

Bootstrapping is the no-investors route: your savings, your customers’ payments, nothing else. Imagine two friends in Bologna who build a scheduling tool for physiotherapists, charge €29 a month from week one and cover the gaps with freelance work. They keep control. They also grow only as fast as the account allows. See how to start a startup with no money.

Friends and family round

Your first outside cash comes from people who back you before they back the business: relatives, friends, an old boss. Four of them put in €5,000 each? That’s €20,000. Founders skip the paperwork here, and it comes back to bite them. Loan, gift or stake in the company? Pick one before the money moves. The options are in your first €50,000 from friends, family and angels.

Pre-seed

Pre-seed is the earliest round of outside money. You have a prototype or a handful of customers, not yet a business that repeats. In Italy, pre-seed and seed rounds made up 59% of the 145 deals in the first half of 2026 but only €172 million of the €813 million invested (Growth Capital and Italian Tech Alliance). Many deals, small cheques. Our guide to startup funding stages puts every round in order.

Seed round

Seed is the round big enough to start building a team, and an angel group or an early-stage fund usually leads it. Italian seed rounds added up to €135 million in the first half of 2026. On Carta, the American cap table platform, the median software seed raised $4.1 million for 18% of the company, which is the price of the cash, paid in ownership.

Series A

Series A is for companies whose growth has stopped being an accident and become a pattern. A fund now wants to pour fuel on it. Carta’s median software Series A raised $14.4 million, again for 18% of the company. In Italy it’s a narrow door: Growth Capital and Italian Tech Alliance counted 53 Series A rounds in 2025. Read how to raise capital for a startup in Italy.

Business angel

A business angel is a private person investing their own money in an early company, often a former founder who adds advice and introductions. In Italy many angels invest in groups, such as Italian Angels for Growth or the Club degli Investitori. They come in before venture funds and write smaller cheques. How to approach them is in business angels in Italy, and what they get back is in investor tax breaks in Italy and the US.

Venture capital

Venture capital funds play with other people’s money: pension funds, banks, wealthy families. They spread it over a portfolio of startups and hope one or two repay the whole fund. Hence the obsession with market size over profit. In 2025, Italian startups raised €1.735 billion in 436 rounds, from a record 354 active investors. How the funds work is covered in venture capital in Italy.

Accelerator (and incubator)

Batch of startups, a few months, a small investment, mentors, a network and a demo day at the end: that’s an accelerator. An incubator is slower and usually hosts earlier teams, often through a university. In Italy, CDP Venture Capital runs a national network of accelerators. Abroad, Y Combinator invests $500,000 per company, split into $125,000 for 7% plus $375,000 on an uncapped SAFE. See how CDP Venture Capital works and starting a startup at university.

SAFE

SAFE is short for Simple Agreement for Future Equity. The investor wires the money now and gets shares later, automatically, when you raise a priced round, usually with a discount or a valuation cap. Y Combinator created it in 2013, and by the second quarter of 2026 a SAFE sat behind 93% of the pre-seed rounds on Carta. Italy leans on the convertible loan instead, which is next. SAFE vs convertible note compares the two.

Convertible note

A convertible note is a loan repaid in shares instead of cash. Say a friend lends your SRL €50,000 at 6% interest, to convert at the next round with a 20% discount. It isn’t a SAFE, because it’s debt: interest builds up and there’s a maturity date, so if no round arrives by then the lender can ask for the money back. In Italian, prestito convertibile.

Term sheet

A term sheet is a short summary of the deal on offer: amount, valuation, board seats, who gets paid first. Most of it doesn’t bind anyone. Two parts usually do, confidentiality and exclusivity, which means you can’t shop the deal around for a few weeks. Have someone who has seen a few of these read yours before you sign. The term sheet, clause by clause shows what’s standard.

Due diligence

Due diligence is the checking an investor does between the term sheet and the wire transfer. Lawyers read your statute and contracts, someone compares your model with your bank statements, and the investor phones a couple of customers. Deals stall on boring things: a founder who never assigned their IP to the company, a cap table that doesn’t match the Registro Imprese. Our startup due diligence guide has the checklist.

Lead investor

In a round with several investors, one of them leads. The lead sets the terms, negotiates the term sheet and writes the biggest cheque. The others follow. Say you’re raising €600,000. A fund commits €300,000 and drafts the term sheet, and six angels split the rest. Finding a lead is usually the hard part, which is where how to find investors begins.

Equity crowdfunding

Equity crowdfunding is raising small amounts from many people through an online platform, and they become shareholders. In Italy the platforms need an authorisation, mostly from Consob, and the EU regulation covers offers up to €5 million over twelve months. The Ministry counted 161 campaigns in 2024, raising €112.38 million between them. Before you plan one, read equity crowdfunding in Italy.

Grant

A grant is money you never have to pay back, a contributo a fondo perduto in Italian, as long as you spend it as the call says and prove you did. Pure grants are rarer than people think. Smart&Start is mostly a loan. Resto al Sud 2.0 offers young people in eight southern regions a voucher of up to €40,000 (€50,000 with extras). Want more? Browse grants for founders under 35.

Data room

A data room is one organised online folder holding everything an investor will want to inspect: statute, cap table, contracts, bank statements, financial model. A plain Google Drive works, with sub-folders called 01 Company, 02 Team, 03 Product and 04 Financials. It saves weeks and signals a tidy company. The data room checklist starts with the Italian documents, such as the visura camerale.

Valuation and ownership

Slow down here. First-time founders get surprised in this group. Every example is arithmetic you can redo on paper.

Valuation

Valuation is what the company is worth the day an investor buys in. Nobody can calculate it at the start, so don’t try. It’s a price two people agree on after looking at the team, the market, the competition and how much you’re willing to sell. An angel puts in €100,000 for 10%? You’ve just been valued at €1 million, after the money. See how to value a pre-revenue startup.

Pre-money valuation

You say the company is worth €1,000,000 and an investor adds €250,000. Pre-money is the €1,000,000, what the company is worth before the cash goes in. After the cash it’s worth €1,250,000, and she owns 250 of those 1,250, a fifth. Which figure gets quoted decides how much you give away, so read pre-money vs post-money valuation before you negotiate.

Post-money valuation

Post-money is pre-money plus the cheque, and it’s the number you divide by to find the investor’s slice, which is why it matters. Same €1 million, same €250,000. If the €1 million is post-money, the investor gets 25%. If it’s pre-money, 20%. Always ask which one.

Equity

Equity is the part of the company people own, and their cut of whatever it sells for. Three founders with a third each hold 33.3% apiece. In an Italian SRL it’s technically quote, not shares, but everybody says equity. How much to hand out early? That’s how much equity to give away at pre-seed and seed.

Dilution

Dilution is what happens to your percentage when new shares appear. The pie grows and your slice shrinks. Take Carta’s 18% median for a seed and for a Series A: you start at 100%, drop to 82% after the seed and 67.2% after the Series A, before any option pool. Is that bad? Not if the pie grows faster than your slice shrinks.

Cap table

A cap table answers one question: who owns what? Founders, investors, the option pool, and any convertibles waiting to turn into shares all go in. The Registro Imprese tracks who holds which quota in an SRL, but it won’t tell you about options or loans that convert later. Yours has to. Start it in a spreadsheet on day one. Our cap table guide builds one from founding to seed.

Fully diluted

Fully diluted counts ownership as if every option and convertible were already shares. 100,000 shares exist, 15,000 are reserved as options and 5,000 will come from a convertible, so fully diluted it’s 120,000. Your 60,000 are 60% today and 50% fully diluted. Investors price on the second number. See fully diluted, explained.

Option pool

The option pool is a stash of shares kept for future employees, advisers and key hires, so you can pay in ownership when you can’t pay in cash. Investors usually want it created before they invest. Guess whose slice it comes out of. Yours. Carta’s 2023 data put seed-stage pools at 13 to 14%. An SRL has no shares, so plans run through quote: see our employee option pool guide.

Vesting

Vesting means earning your shares over time instead of owning them on day one. For founders the usual deal is four years with a one-year cliff, which Carta calls the industry standard. Split the company 50/50 with a friend who disappears after five months and, without vesting, he walks off with half. A worked example is in how to split equity between co-founders.

Cliff

The cliff is the waiting period at the start of vesting. With a one-year cliff, nothing vests for twelve months. Then a quarter arrives at once and the rest monthly, 1/48 at a time. A co-founder with 20% who leaves after eight months keeps nothing. Leaves after fourteen? Fourteen of the 48 monthly slices have vested, so she keeps 14/48 of her 20%, or 5.8%.

Liquidation preference

Liquidation preference decides who gets paid first when the company is sold. Take an investor who puts in €1 million for 20% with a 1x non-participating preference, in a company that sells for €3 million. Twenty percent would be €600,000, so the investor takes the €1 million back instead, and everyone else shares the other €2 million. See liquidation preference, explained for the participating version.

Exit

An exit is how investors, and eventually founders, get paid: the company is sold to a larger one, or listed on a stock exchange. Italy in 2025 took the first road. There were 31 exits through acquisitions, the largest being AXA’s purchase of Prima, and no stock market listings (Growth Capital and Italian Tech Alliance).

Unicorn

Unicorn is the name for a privately held startup valued at $1 billion or more, picked because they’re rare, and they are. Which Italian startups have crossed that line? Our list of Italian unicorns has the names. Most good startups never get near it, and that’s fine.

The numbers investors ask for

Most words in this group are formulas, so one made-up app will carry all of them: 200 customers paying €30 a month, €45,000 in the bank, €9,000 of monthly costs, and one month in which 25 customers join and 10 leave. Every example below uses those numbers.

Term	Formula	Our made-up app
MRR	customers × monthly price	200 × €30 = €6,000
ARR	MRR × 12	€6,000 × 12 = €72,000
Net burn	monthly costs minus monthly revenue	€9,000 minus €6,000 = €3,000 a month
Runway	cash ÷ net burn	€45,000 ÷ €3,000 = 15 months
Churn	customers lost ÷ customers at the start	10 ÷ 200 = 5% a month
CAC	sales and marketing spend ÷ new customers	€3,000 ÷ 25 = €120
LTV	monthly price × gross margin × customer lifetime	€30 × 80% × 20 months = €480
LTV ÷ CAC	LTV divided by CAC	€480 ÷ €120 = 4

Burn rate

Burn is how much cash the company loses each month. Gross burn is everything you spend. Net burn is what’s left after revenue comes in. Our app spends €9,000 and earns €6,000: gross burn €9,000, net burn €3,000. Say “burn” and people mean the second. Running out of cash is the most common way startups end, as why startups fail shows.

Runway

Runway is the number of months before the cash hits zero: cash divided by net burn. €45,000 at €3,000 a month gives 15 months. Do your own too: savings divided by monthly living costs. That number should decide when you quit your job. For the personal side, read when to quit your job for a startup. For the company side, a simple financial model turns the sum into a month-by-month plan.

MRR and ARR

MRR stands for monthly recurring revenue: whatever your subscriptions bring in each month. ARR is that figure times twelve. One-off sales, set-up fees and consulting don’t count, because they don’t repeat. Our app has 200 customers at €30: MRR €6,000, ARR €72,000. Seed investors read these closely, so see the metrics they expect at seed stage.

CAC (customer acquisition cost)

CAC is what it costs, all in, to win one new customer: sales and marketing spend divided by the customers it brought in. Our app spent €3,000 on ads and discounts and gained 25 customers, so CAC is €120. Count everything, including the salary of whoever sells. The CAC and LTV guide shows how to calculate both without fooling yourself.

LTV (lifetime value)

LTV is the gross profit an average customer brings before leaving. At €30 a month, an 80% gross margin and a lifetime of 20 months, our app’s LTV is €480. Set it against CAC: 480 ÷ 120 is 4, so every euro spent winning customers comes back four times. Below 1, you lose money on each customer you win.

Churn

Churn counts the customers who leave in a period. Ten of our 200 cancelled this month: that’s 5% monthly churn, and the average customer stays 1 ÷ 0.05 = 20 months. Sounds small. It isn’t: lose 5% a month and 46 of every 100 customers who joined on day one are gone a year later.

Traction

Traction means numbers that prove people want what you built: paying customers, revenue, active users, a waitlist that converts. A student startup in Padua with ten paying pilot customers beats ten thousand signups who don’t pay. Investors will ask what changed since last month, so keep a simple log. Our guide to what investors look for in a first-time founder shows what counts.

Unit economics

Unit economics asks whether you make or lose money on one unit of what you sell, before overheads. A unit can be a customer, an order or a subscription. Our app looks healthy: €480 of lifetime profit for €120 of acquisition cost. Let churn double to 10% a month and LTV falls to €240, the ratio to 2. Same app. Much thinner margin for error.

TAM, SAM and SOM

TAM, SAM and SOM are three nested circles of market size. TAM is everyone who could buy something like yours, SAM the part you can actually reach, SOM what you can win in your first few years.

Invented numbers, for Lievito, a bakery-software startup. 10,000 Italian bakeries at €708 a year make a TAM of about €7.1 million. The 3,000 whose tills can export data are a SAM of about €2.1 million. 400 signed in three years is a SOM of about €283,000 a year. Count customers one by one, not “1% of a huge market”. How to write a business plan shows where it goes.

Product and market

MVP (minimum viable product)

An MVP is the smallest version of your idea that real customers can use, built to find out whether they want it. Eric Ries defined it in 2009 as the version that collects “the maximum amount of validated learning about customers with the least effort”. Picture an app that books rehearsal rooms for bands in Naples. The first version could be an Instagram page, a Google Form and a phone call to confirm each booking. Build an MVP without coding has a two-week plan.

Product-market fit

How do you know you have product-market fit? Customers come back without reminders. They bring their colleagues. You can’t keep up. Marc Andreessen coined the phrase in 2007: “being in a good market with a product that can satisfy that market”. Don’t have it yet? Test with a handful of customers first and validate your startup idea before you spend much.

Pivot

A pivot is a change of one big thing, whether the customer, the problem, the product or the business model, while you keep what you’ve learned. Picture a startup with an app where students swap lecture notes. It finds out that the paying users are private tutors who want to sell their own materials. Same insight, new customer. That’s a pivot made on evidence; panic isn’t one.

Go-to-market

Go-to-market is your plan for reaching the first customers: who first, through which channel, at what price. A Milan startup selling payroll software to small accountancy firms might begin with thirty firms found on LinkedIn and one trade fair, and skip the national ad campaign. Abroad the sums change, so see market entry strategy and, if Latin America is on your list, the EU-Mercosur agreement for Italian SMEs.

B2B and B2C

Dental clinics paying a monthly fee for scheduling software: that’s B2B, where you win few customers at high prices after long sales cycles. A pizza-ordering app for anyone with a phone is B2C: many customers, small tickets, a lot of advertising. B2B stands for business to business and B2C for business to consumer. Some startups mix both, but the side you start on shapes your metrics, your team and the questions investors ask.

Pitch and team

Pitch deck

A pitch deck is 10 to 14 slides telling investors what you do, why now, how big the market is, what you’ve achieved and what you’re asking for. Investors skim, so give each slide one idea and make sure it still works when you’re not in the room. The pitch deck structure shows the order. The mistakes that sink decks shows what to cut.

One-liner (elevator pitch)

Your one-liner is a single sentence without jargon: what you do, for whom, and why it matters. “We use AI to transform bakery operations” tells a stranger nothing. “Lievito helps independent bakeries throw away less bread by telling them each evening how much to bake tomorrow” does, and they can repeat it (Lievito is invented). The formula is in your startup in one sentence.

Co-founder

Few decisions matter more than choosing a co-founder, and people rush it anyway. A co-founder starts the company with you, owns a real slice of it and works on it full time, so look first among people you’ve actually watched work. Build something small together before you sign anything. Ten questions to ask are in our guide on how to find a co-founder.

Words you only hear in Italy

These four never get translated, even in English. The rules behind them have moved recently, so the dates below matter.

Innovative startup (startup innovativa)

Startup innovativa is a legal status, not a quality label. A young capital company working on innovative technology can enter a special section of the Registro Imprese if it passes one of three tests: R&D spending of at least 15% of costs or production value, a team with enough PhDs, researchers or master’s graduates, or a patent or registered software. The register counted 12,073 of them at 31 October 2025. The status lasts three years from registration, and up to five if extra conditions are met. For the details, read the requirements and benefits, or how to patent an idea in Italy.

Smart&Start Italia

Smart&Start Italia is a state loan for innovative startups, run by Invitalia. Zero interest, covering 80% of eligible costs on plans between €100,000 and €1.5 million, or 90% if the team is all women, all under 36 or includes a PhD researcher working abroad. In the southern regions, 30% of the loan doesn’t have to be repaid. A ministerial decree of 13 July 2026 will update parts of it once its implementing circular is out, so read our Smart&Start Italia guide and the Invitalia page before you apply.

SRL and SRLS

An SRL, società a responsabilità limitata, is the usual company for an Italian startup. Your personal assets stay separate from the company’s. Share capital is normally €10,000 but can go down to €1 if paid in cash and in full. The SRLS, or semplificata, is the lighter version for individuals: capital between €1 and €9,999.99, a standard-form deed, no notary fee. Costs and trade-offs are in how much money you need to start a startup.

Invitalia

Invitalia is the national development agency of Italy, wholly owned by the Ministry of Economy and Finance. It runs several schemes founders ask about: Smart&Start Italia, ON (the zero-interest loans for new businesses), Resto al Sud 2.0 and Autoimpiego Centro-Nord. Applications go through its online platform. Calls open, close and sometimes run out of money, so check the status page on the day.

Your checklist for the first conversation

1. Try your one-liner on a friend outside the startup world. Can they repeat it?
2. Work out your runway in months. Cash divided by net burn.
3. Write your cap table, even if it has three lines.
4. Pre or post? Know which one before you quote a valuation.
5. Pick the one number you’d show first (MRR, paying pilots, waitlist conversion). Then pick the date it should move by.
6. In Italy? Check whether startup innovativa status fits you, and what an SRL or SRLS costs in the first year.

That’s the whole list. The next stop on the map is Italian startups that started small, real companies that began with less than you’d think. And if you’d like to know how many of these words you can already use, there’s a free 12-question readiness test.

This article is general information, not legal or tax advice. Rules change: check the official call or ask a professional before you apply.