Updated 28 August 2026 · 55 terms
Startup vocabulary has a particular problem: it mixes everyday words used in a precise technical sense, French acronyms with no Anglo-Saxon equivalent, and anglicisms with no stable translation. The result is that two people at the same table can use the same term meaning different things, and sign anyway.
This glossary covers the whole path: the organisations that support you at the start, what you have to prove on the product side, then the financing vocabulary once investors enter the conversation. Every term is treated the same way: a short definition, what it actually means in practice, then a concrete example.
The example is the point. Knowing that a liquidation preference "determines the order of distribution of sale proceeds" helps nobody; seeing that it is worth €1.5M on an €8M exit changes how you read a term sheet. Same for incubators and accelerators: the definitions stay vague until you put the two side by side.
Ecosystem and support
The organisations and people orbiting a young company, and what they actually do.
Incubator
An incubator is an organisation that supports a startup at the very beginning, often before it has a finished product or a first customer. It provides space, mentoring and a working method over a long period of six to twenty-four months, and usually takes no equity.
Read the full definition →Accelerator
An accelerator is a short, highly selective programme, typically three to six months, for a startup that already has a product and early customers. It usually invests a small cheque in exchange for 5% to 10% of the company, and ends with a demo day in front of investors.
Read the full definition →Business angel
A business angel is an individual investing their own money in very young startups, generally €10K to €100K per deal. Unlike a fund they decide alone and quickly, and usually bring operating experience and a contact book alongside the cheque.
Read the full definition →Venture capital (VC)
Venture capital is equity investment into young, private, high-growth companies. A VC fund raises money from institutional investors, deploys it across twenty to thirty holdings, and has to return it to them multiplied within roughly ten years.
Read the full definition →Love money
Love money is money invested by the founder's circle: family, friends, people close to them. It is often a startup's very first financing, before any angel investor, and usually falls between €5,000 and €50,000.
Read the full definition →Honour loan
An honour loan is a personal, interest-free, unsecured loan granted to the founder rather than the company, by French entrepreneurship support networks. It strengthens personal contribution, which in turn unlocks a substantially larger bank loan.
Read the full definition →French innovation funding (CIR, CII, JEI)
French innovation funding covers the country's non-dilutive support schemes: Bpifrance grants and repayable advances, the research tax credit (CIR), the innovation tax credit (CII) and young innovative company (JEI) status. Combined, they can represent several hundred thousand euros without giving up a single share.
Read the full definition →LP and GP
LPs, or limited partners, are the investors who entrust their money to a fund. GPs, or general partners, are the fund's partners who make investment decisions and manage the portfolio. Understanding the distinction explains most of an investor's behaviour in a meeting.
Read the full definition →Equity crowdfunding
Equity crowdfunding lets a large number of individuals invest small amounts in a startup through a regulated platform. In exchange they receive shares, usually pooled into a single vehicle so the cap table does not fill with hundreds of names.
Read the full definition →Product and traction
What you have to prove before money enters the conversation, and the words used to describe it.
MVP (minimum viable product)
An MVP, or minimum viable product, is the smallest version of a product that lets you learn something decisive from real users. It is not a degraded version of the final product: it is an experiment designed to confirm or kill a specific hypothesis as fast as possible.
Read the full definition →Product-market fit
Product-market fit is the point at which a product meets a real need in a market large enough that demand stops being pushed and starts pulling. In practice it shows up as three signals: users stay, they come back on their own, and they tell others without being asked.
Read the full definition →Traction
Traction is measurable proof that the market is responding: users, customers, revenue, and above all steady progression. It is the one argument that replaces a narrative in an investor meeting, because it cannot be argued with.
Read the full definition →Pivot
A pivot is a structural change of direction that keeps the learning accumulated: you change the target, the product or the business model, but you keep what you understood about the problem. It is neither a failure nor an admission, it is a decision based on data.
Read the full definition →Go-to-market
Go-to-market is how a company reaches customers and converts them: which segment, through which channel, with what message and at what price. It is not a marketing plan, it is the choice of an acquisition path you can repeat.
Read the full definition →Ideal customer profile (ICP)
The ideal customer profile, or ICP, describes precisely the type of company or person for whom your product creates the most value. It is not your target market: it is the subset where you win most often, fastest, and where customers stay longest.
Read the full definition →Early adopter
An early adopter is a user who adopts a product before it is finished, because the problem they face is painful enough to be worth the inconvenience. They are the only audience capable of validating an MVP, since nobody else would tolerate an incomplete product.
Read the full definition →Fundraising process
The steps and documents between a first investor coffee and money landing on the account.
Term sheet
A term sheet is the two- to five-page document in which an investor sets out the conditions under which they propose to invest: valuation, amount, governance and protections. Apart from exclusivity and confidentiality it is not legally binding, but in practice what it contains is almost never renegotiated.
Read the full definition →Due diligence
Due diligence is the audit an investor runs after the term sheet to confirm the company is what it claimed to be. It covers legal, financial, product, commercial and team, and typically takes four to eight weeks on a European seed round.
Read the full definition →Data room
A data room is the secure online space where a startup gathers the documents investors review during due diligence. It replaces emailed attachments with traceable, revocable, organised access, so you know who read what and for how long.
Read the full definition →Lead investor
The lead investor sets the price of the round, runs due diligence, drafts the term sheet and usually writes the largest cheque. The other investors, called followers, accept the terms the lead negotiated without redoing the audit work.
Read the full definition →Shareholders' agreement
A shareholders' agreement is the private contract governing the relationship between a startup's shareholders: who can sell shares and on what terms, who decides what, and what happens when a founder leaves. It sits alongside the public articles of association and covers what those cannot.
Read the full definition →Pitch deck
A pitch deck is the ten to fifteen slide presentation a founder sends or presents to earn the next meeting. Its purpose is not to explain everything, but to give enough for an investor to want to know more.
Read the full definition →Roadshow
The roadshow is the active phase of a fundraise: the sequence of investor meetings run over a few weeks. It is best conducted in parallel rather than in series, so decisions land at the same time and create round momentum.
Read the full definition →Closing
Closing is when a round becomes effective: final documents are signed, the capital increase is recorded, then the money is transferred. It happens several weeks after the term sheet, once due diligence is complete and legal documentation is finalised.
Read the full definition →Bridge round
A bridge is interim financing raised between two rounds, meant to reach a milestone that will allow you to raise on better terms. It usually takes the form of convertible notes or warrants subscribed by investors already on the cap table.
Read the full definition →Down round
A down round is a financing round priced below the previous one. Beyond the mechanically larger dilution, it triggers existing investors' anti-dilution clauses, which amplifies the ownership founders lose.
Read the full definition →Warranties and indemnities
Warranties and indemnities are the undertaking by which founders guarantee to the investor that the information provided about the company is accurate. If a liability originating before completion surfaces afterwards, founders bear the financial consequences within the negotiated limits.
Read the full definition →Funding instruments
The legal vehicles used to invest before or during a priced round.
SAFE
A SAFE (Simple Agreement for Future Equity) is a contract under which an investor pays money now in exchange for shares issued later, at the next priced round. Created by Y Combinator in 2013, it is neither debt nor equity: no interest, no maturity date, only a promise to convert.
Read the full definition →BSA AIR
The BSA AIR (Bon de Souscription d'Actions – Accord d'Investissement Rapide) is the French instrument for investing in a startup without setting its valuation immediately. The investor pays now and receives shares at the next round, at a price bounded by a valuation floor and a valuation cap.
Read the full definition →Convertible note
A convertible note is a loan to a startup that turns into shares on a trigger event, usually the next funding round. Until it converts it remains debt: it accrues interest and must be repaid at maturity if no conversion occurs.
Read the full definition →BSA (share subscription warrants)
A BSA, or share subscription warrant, gives its holder the right to buy shares at a price fixed in advance, for a set period. Unlike a BSPCE it is not restricted to employees: it is used to compensate an advisor or a contractor, or to structure a financial transaction.
Read the full definition →Preferred shares
Preferred shares carry special rights that ordinary shares do not: liquidation preference, veto rights, enhanced information, sometimes a priority dividend. They are the class of shares professional investors subscribe to.
Read the full definition →Venture debt
Venture debt is a loan to a startup that has already raised equity, used alongside a round rather than instead of one. It dilutes very little, but it is repaid with interest and usually comes with warrants for the lender.
Read the full definition →Shareholder current account
A shareholder current account is a cash advance made by a shareholder to their company, repayable and creating no new shares. It is the simplest way for a founder to fund the business temporarily without changing the ownership split.
Read the full definition →Equity and dilution
Who owns what, at what price, and what founders keep after each round.
Cap table
A capitalisation table, or cap table, records who owns what in a startup: every shareholder, their share count, their percentage and the class of shares held. It is the first document an investor asks for, and the most revealing about how the company has been run.
Read the full definition →Dilution
Dilution is the fall in an existing shareholder's percentage when a company issues new shares. It does not reduce how many shares you own, only their relative weight: owning 20% of a €10M company beats owning 100% of a €1M one.
Read the full definition →Pre-money and post-money valuation
Pre-money valuation is what the company is worth before the round's money arrives; post-money is that same value plus the amount raised. The formula is direct, post-money = pre-money + amount raised, and an investor's stake is always computed against the post-money figure.
Read the full definition →BSPCE (French startup stock options)
A BSPCE (Bon de Souscription de Parts de Créateur d'Entreprise) is the French scheme granting an employee the right to buy shares in their company at a price fixed in advance. If the share value rises, the holder buys at the old price and keeps the difference.
Read the full definition →Liquidation preference
A liquidation preference sets the order and the amount each shareholder receives when the company is sold. A 1x non-participating preference guarantees the investor gets their money back before founders receive anything.
Read the full definition →Vesting and cliff
Vesting is the mechanism by which shares or options are only definitively earned over time spent at the company. The norm is four years with a twelve-month cliff during which nothing vests: leaving before that date means keeping nothing.
Read the full definition →Option pool
The option pool is the reserve of shares set aside for employees. Its size and the moment it is created are two separate negotiation points, and the second usually costs founders more than the first.
Read the full definition →Anti-dilution
An anti-dilution clause protects an investor against a fall in valuation at a later round. If the next round's price per share is below what they paid, they receive additional shares for free to compensate. Those shares come out of the founders' stake.
Read the full definition →Pro rata rights
Pro rata rights let an existing investor participate in later rounds up to their current ownership, so they are not diluted. It is a right to participate, never an obligation, and how a fund uses it is read closely by incoming investors.
Read the full definition →Exit
An exit is the event that turns shareholders' shares into cash: a trade sale, a buyout by a fund, or a listing. It is the horizon that shapes all of venture capital's logic, since a fund only realises its performance at that moment.
Read the full definition →Secondary sale
A secondary sale is the sale of existing shares by one shareholder to another, with no new shares issued and no money going to the company. It lets a founder or an early investor take some cash off the table before an exit.
Read the full definition →Metrics
The numbers an investor checks before even opening your deck.
Runway
Runway is the number of months a startup can operate before running out of cash at its current spending rate. It is cash available divided by monthly net burn, meaning spending after receipts are deducted.
Read the full definition →ARR and MRR
MRR (Monthly Recurring Revenue) is a subscription business's recurring monthly revenue; ARR (Annual Recurring Revenue) is its annual projection, twelve times MRR. Only contractual, repeatable revenue counts: one-off services are excluded.
Read the full definition →Burn rate
Burn rate is how fast a startup consumes its cash, expressed in euros per month. Gross burn is total spending; net burn subtracts receipts. Net burn is the figure that determines runway.
Read the full definition →CAC (customer acquisition cost)
Customer acquisition cost (CAC) is the average amount spent to win one new paying customer. It is total sales and marketing spend for a period divided by the number of customers acquired in that same period.
Read the full definition →LTV and the LTV/CAC ratio
LTV, or lifetime value, is the total gross margin a customer generates over their whole life as a customer. Divided by acquisition cost it gives the LTV/CAC ratio, which shows whether the business model works: below 3, acquisition costs too much relative to what it returns.
Read the full definition →Churn
Churn is the share of customers or revenue lost over a given period. Measured in customers it is called logo churn; measured in euros it is revenue churn. The gap between the two often says more than either figure alone.
Read the full definition →TAM, SAM and SOM
TAM, SAM and SOM describe three concentric market circles: TAM is the total theoretical market, SAM the portion your offer can genuinely address, SOM the portion you can capture in the near term. Investors look mainly at SOM, because it is the only one you are actually committing to.
Read the full definition →Unit economics
Unit economics describe the profitability of a single unit sold, usually one customer. They answer a simple question: when you sell one more, do you make money or lose it? While the answer is negative, growing makes the problem worse rather than solving it.
Read the full definition →Cohort analysis
A cohort groups customers who arrived in the same period and follows them over time. Cohort analysis shows whether the product is improving, by comparing how January's customers behave against June's at the same age.
Read the full definition →Rule of 40
The Rule of 40 adds a software company's annual growth rate to its operating margin. If the sum reaches 40 or more, the company is considered properly balanced between growth and profitability, whatever the split between the two.
Read the full definition →Frequently asked questions
What is the difference between an incubator and an accelerator?
An incubator supports a team still searching for its product over six to twenty-four months, and generally takes no equity. An accelerator works over three to six months with a startup that already has a product and customers, invests a small cheque and takes 5% to 10%. The full comparison is on the Incubator page.
Which term should you start with?
MVP and product-market fit if you are still at the product stage. Pre-money and post-money valuation, then dilution, as soon as an investor enters the conversation: those two shape how everything else reads.
Which terms are specific to France?
BSPCE, BSA AIR and the pacte d'associés have no strict equivalent in US law. SAFEs and stock options are their functional cousins, but the legal and tax regimes differ enough that you cannot substitute one for the other.
Does this glossary replace a lawyer?
No. It exists so you understand what is being discussed and can ask the right questions. Drafting and negotiating a term sheet, a shareholders' agreement or a convertible instrument is work for counsel who takes responsibility for your specific situation.
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