Burn rate

Burn rate is how much cash you're spending each month above what's coming in. Gross burn is your total monthly outflow; net burn accounts for any revenue offsetting it.

CAC – Customer Acquisition Cost

CAC is everything you spend to win a new customer, including marketing campaigns, sales team salaries, commissions, the cost of tools and software, and any contractor fees.

CapEx – Capital Expenditure

CapEx covers spending on assets that will benefit the business over the long term, such as equipment, hardware, and sometimes R&D. It’s capitalised on the balance sheet and depreciated over time.

Churn

Churn is the rate at which customers leave you in a given period. For subscription businesses, it's usually expressed as a monthly or annual percentage.

COGS – Cost of Goods Sold

COGS is the direct cost of delivering your product or service. For a hardware company, that could be the cost of components and manufacturing. For a SaaS business, it may be hosting, payment processing fees and customer support tied to delivery.

Contagion models

Frameworks that simulate how cultural traits or diseases spread through a population, often using compartmental approaches like SI or SIR models.

CRISPR

A biotechnology tool used for precise genome editing, enabling scientists to modify DNA in various organisms, including humans, plants, and microbes.

Dilution

Dilution is the reduction in your ownership percentage when new shares are issued, typically in a funding round or when expanding the option pool for employees.

EBITDA – Earnings Before Interest Taxes, Depreciation and Amortisation

EBITDA is a popular profitability metric because it strips out factors that can vary based on accounting choices, capital structure or geography.

Fibonnaci sequence

Named after its inventor, an Italian mathematician from the middle ages, the Fibonacci sequence is a sequence in which each element is the sum of the two elements that precede it

Fitt’s Law

A law that predicts that the time to move to a target area depends on the distance to the target and its width, with longer times for smaller, farther targets.

FOAK – First of Its Kind

An economic term that refers to the first item or generation of items using a new technology or design.

GAAP – Generally Accepted Account Practice/Principles

GAAP is the framework of standards that ensures financial reporting is accurate, consistent and comparable across companies. In the UK, it stands for Generally Accepted Accounting Practice, and in the US, it stands for Generally Accepted Accounting Principles.

ICP – Ideal Customer Profile

A detailed description of a business's most valuable customer type, focusing on attributes like demographics, behavior, and pain points to optimize marketing and sales efforts.

Idempotency

A property where performing an operation multiple times has the same effect as performing it once, ensuring consistent results.

LTV – Lifetime Value

LTV is the total revenue you can expect from a customer over the entire time they stay with you. The standard calculation multiplies three figures together: average purchase value, average purchase frequency, and average customer lifespan.

LVA – Layered Voice Analysis

A technology that analyses inaudible cues to detect genuine emotions and cognitive states in human voices.

mRNA - Messenger ribonucleic acid

A single-stranded molecule that carries genetic instructions from DNA to the cell's protein-making machinery, enabling the synthesis of essential proteins.

MRR and ARR – Monthly and Annual Recurring Revenue

MRR is the predictable revenue you can expect each month from active subscriptions. ARR is the same idea over a 12-month horizon and is typically calculated as MRR × 12 for businesses with stable monthly plans.

Non-linear instability

The phenomenon where a system's behaviour becomes unpredictable or chaotic due to non-linear interactions.

OpEx –Operating Expenditure

OpEx is the day-to-day cost of running the company, including costs such as rent salaries, software subscriptions and utilities. These hit the income statement in the period they’re incurred.

Pre-money and post-money valuation

When you raise, your pre-money valuation is what the company is worth before the new investment lands. When you add the new money, you’ll get the post money valuation.

Product-market fit (PMF)

PMF is the point at which you’ve built something a clearly defined market genuinely wants and is willing to pay for. It’s less a single metric than a pattern that you’ll start to notice as you retain customers and generate significant demand.

ROCE and ROIC – Return on Capital Employed and Return on Invested Capital

ROCE divides operating profit by total capital employed –broadly, debt plus shareholders' equity. ROIC takes a similar approach but uses net operating profit after tax, divided by the capital actively invested in operations.

Runway

Runway is the number of months your current cash will last at your current net burn rate. This is calculated as cash in the bank divided by monthly net burn.

Stratospheric aerosols

Tiny reflective particles injected into the upper atmosphere to reflect sunlight and cool the Earth's climate, inspired by natural volcanic eruptions.

TAM, SAM, SOM – Total Addressable Market, Serviceable Addressable Market, Serviceable Obtainable Market

TAM is the total revenue available if you captured 100% of your market. It’s useful for showing the scale of the opportunity. SAM narrows that down to the segment you can realistically serve given your product and geography. SOM is the slice you can plausibly capture in the near future.