First Round Glossary

ARPU

ARPU, or average revenue per user, measures how much revenue a company generates from each customer over a specific period. It’s one of the clearest indicators of how effectively a business is monetizing its user base.

ARR

Annual Recurring Revenue (ARR) is the amount of predictable subscription revenue a company expects to generate in a year.

Beta Testing

Beta testing is the stage where real users test a nearly finished software product in a production environment before its official release. It’s the final checkpoint to uncover bugs, validate usability and confirm market readiness.

Break-Even Point

The break-even point (BEP) is when a company’s total revenue exactly equals its total costs. It’s the moment when sales cover both fixed expenses (like rent and salaries) and variable costs (like raw materials and shipping).

Cash Runway

Cash runway, sometimes called financial runway, is the amount of time a startup can continue operating before running out of money. It measures how long a company’s cash can support operations given its current spending rate and available resources.

Churn Rate

Churn rate measures the percentage of customers or accounts that cancel or fail to renew within a given period. For subscription businesses, it’s one of the clearest signals of customer retention, recurring revenue stability and long-term growth potential.

Freemium

The Freemium Business Model combines “free” and “premium:” a company offers a basic version of its product indefinitely at no cost, while advanced features, services, or capacity are locked behind a paid upgrade.

Gross Merchandise Value (GMV)

Gross Merchandise Value (GMV) is the total value of all merchandise sold through a platform over a specific period. It’s a raw measure of sales activity calculated before subtracting fees, expenses, discounts or returns.

Growth Hacking

Growth hacking is the multidisciplinary practice of identifying and improving key business metrics quickly and meaningfully.

K-factor

K-Factor (also called the virality coefficient) measures how many new users each existing user or customer brings in over a defined time period.

Key Performance Indicators (KPIs)

Key performance indicators (KPIs) are focused measurements that track progress against business objectives. They distill performance into a small set of trackable signals that show whether a company, team or project is on course to meet its strategic plan.

Net Revenue Retention (NRR)

Net Revenue Retention (NRR) measures how much recurring revenue you retain and expand from existing customers over a set period, usually a year.

Scalability

Scalability is how a business, product, process or system grows under increased demand while maintaining performance.

Stealth Mode

A stealth mode startup is a company that deliberately avoids public visibility while developing its product and operations.

Technical Debt

Technical debt is the implied cost of additional work created when a team prioritizes faster delivery over the most achievable or maintainable solution.