Decoded · Topic
Startup terms, decoded for Gen Z: what they mean, where you’ll hear them, and the pop-culture version.
Synergy is the extra value created when two businesses or teams combine, so that the whole is worth more than the parts added up. In mergers and acquisitions it usually means specific savings or extra sales the combined company expects to get, and it is often the main reason given for paying a premium for a deal.
Valuation is the estimated value of a company, usually expressed as a single price for the whole business. For public companies it falls out of the share price. For private companies and startups it is agreed between buyers and sellers, often during a funding round, using methods like revenue multiples, comparable deals and discounted cash flow.
Unit economics is the revenue and cost of a single unit of your business, such as one product sold, one order delivered or one customer over their lifetime. It shows whether each unit makes or loses money before fixed costs like rent and head office salaries, and whether growing bigger will make the business healthier or simply lose money faster.
Bootstrapping means starting and growing a business without outside investors, using the founders’ own savings and the revenue that customers bring in. Instead of selling shares to raise a large round, a bootstrapped company funds each step from what it already earns, which usually means slower growth but full control and no investor pressure.
Vesting means you earn your shares or stock options gradually over a set period instead of getting them all on day one. A cliff is a waiting period at the start, often one year, before anything vests at all. A common setup is four years of vesting with a one-year cliff, then monthly vesting after that.
A term sheet is a short document that sets out the main terms of a proposed deal, most often an investment in a startup. It covers how much money is invested, at what valuation, and what rights the investor gets. It is usually mostly non-binding: a shared outline agreed before the full legal contracts are drafted.
A pivot is a deliberate change in a company’s core strategy — the product, the customer, the business model or the market — made because what the company learned is better than what it was building.
Product-market fit is the point where a product solves a real problem for a specific group of people so well that they keep using it, pay for it and tell others, and growth starts to come from demand rather than from the team pushing.
Pre-money valuation is what investors agree a company is worth before their new investment goes in. Post-money is that number plus the money invested. The investor’s ownership is simply the investment divided by the post-money.
Dilution is the drop in your ownership percentage when a company issues new shares to investors or employees. You still hold the same number of shares, but they are now a smaller share of a bigger total.
A cap table is the list of everyone who owns a piece of a company (founders, investors, employees with options) and exactly how much each of them holds. It shows ownership today and how it would change after a new investment.