10 Essential Startup Terms Every New Founder Must Know | LegalWiki Startup Pitching Competition
Entering the startup world is exciting, but it can also feel like learning a new language. From MVPs to burn rates, the lingo can be confusing for first-time founders. But don’t worry, we’ve got you covered!
Here are 10 essential startup terms, explained in simple language, that every new entrepreneur should understand before building the next big thing.
1. Minimum Viable Product (MVP)
An MVP is the simplest version of your product that still works and solves a problem for your target audience. It has just enough features to test your idea in the real world and get feedback from early users. Startups build MVPs to avoid wasting time and money on something people don’t want. For example, instead of launching a full app, you might start with a basic landing page or a demo video.
2. Product-Market Fit
Product-market fit happens when your product perfectly matches what your target customers need. It’s the moment when users love what you’ve built, keep coming back, and even tell others about it. This is a key milestone for any startup because without product-market fit, even the best marketing won’t save a product that people don’t want.
3. Bootstrapping
Bootstrapping means starting and growing your startup with your own money, no outside investment. Many founders begin this way, using savings, side jobs, or early customer revenue to fund their idea. While it gives you full control, it also requires being frugal, creative, and smart about spending every rupee.
4. Burn Rate
Your burn rate is the amount of money your startup spends every month. It’s mostly used for startups that are not yet making profits. If your burn rate is high, your company will run out of cash faster. That’s why founders must track their burn rate closely to make sure they don’t burn out before reaching the next goal or funding round.
5. Runway
Runway is the amount of time your startup has before it runs out of money, based on your current expenses. For example, if you have ₹6 lakhs in the bank and spend ₹1 lakh per month, you have a 6 month runway. It tells you how long you can keep operating before needing more revenue or investment.
6. Pivot
To pivot means to change your product, business model, or target market in a new direction usually based on what you’ve learned from user feedback or market research. Startups often pivot when their original idea isn’t working. It’s not failure, it’s being flexible and finding a better way to succeed.
7. Angel Investor
An angel investor is a wealthy individual who invests their own money into early-stage startups, often in exchange for equity. They usually come in before big venture capital firms and are more likely to invest based on your vision and team. Angel investors often bring not just funds, but also advice, mentorship, and industry connections.
8. Term Sheet
A term sheet is a document that outlines the basic terms and conditions of an investment deal. It’s not a legal contract yet, but it’s like a roadmap for the final agreement. It includes details like how much money is being invested, how much equity is being given, and any special rights investors might get. Every founder should understand term sheets before signing anything.
9. Cap Table (Capitalization Table)
A cap table is a spreadsheet or chart that shows who owns how much of your startup. It includes founders, investors, advisors, and employees with stock options. As you raise funds and give out equity, the cap table changes. Keeping it updated helps you stay clear about ownership and avoid legal or financial confusion later on.
10. Seed Funding
Seed funding is the first round of formal investment for a startup, used to turn your idea into a real business. It often comes from angel investors, startup accelerators, or early-stage venture capitalists. This funding helps you build your product, hire a team, and test your business in the market. It's called "seed" because it helps plant the first roots of your company.
Final Thoughts
The startup journey is full of learning, experimenting, and growing. Knowing these 10 basic terms will give you a strong foundation to speak the language of founders, investors, and mentors with confidence.
Whether you’re pitching an idea, building a prototype, or raising your first round of funding, keep this guide close. You’ll thank yourself later.
We at Legalwiki are organizing, Legalwiki Startup Pitching Competition, 2025 - an exclusive opportunity to pitch your idea in front of leading industry experts, get real-time feedback, mentorship, and win exciting rewards.
Winners will get a cash prize, mentorship to accelerate your idea, and an internship opportunity with Manupatra.
Register Now - https://blog.legalwiki.co/legal-startup-pitching-competition-2025/
To read more, visit legalwiki.co
