Basics
Founder glossary: the terms that matter
Every term from pitch decks, investor meetings and business plans, each explained in one sentence. The same definitions our AI experts use in every Ideontics assessment.
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- TAM
- Total Addressable Market: the total size of the reachable market in a given segment.
- SAM
- Serviceable Addressable Market: the share of the TAM your product or service can actually reach.
- SOM
- Serviceable Obtainable Market: the market share realistically attainable within the next 3–5 years.
- CAC
- Customer Acquisition Cost: the average cost of winning one new customer.
- LTV / CLV
- Lifetime Value / Customer Lifetime Value: projected total revenue per customer over the whole relationship.
- LTV:CAC
- Ratio of customer value to acquisition cost. Healthy: ≥ 3:1. Below 1:1 the business model does not scale.
- ROI
- Return on Investment: the return of an investment expressed as profit relative to capital employed.
- EBITDA
- Earnings Before Interest, Taxes, Depreciation and Amortization: operating result before those items.
- Break-Even
- The point at which revenue equals total cost, no loss and no profit.
- Unit Economics
- Profitability at the level of a single unit: contribution margin per unit sold or per customer.
- Go-to-Market
- Strategy and plan for launching a product or service into the market.
- PMF
- Product-Market Fit: the state in which a product meets strong, demonstrable demand in a target market.
- USP
- Unique Selling Proposition: the distinctive value promise that sets your offer apart from competitors.
- MVP
- Minimum Viable Product: the smallest product version that delivers enough value to validate customer feedback.
- B2B / B2C
- Business-to-Business / Business-to-Consumer: whether you sell to companies or directly to consumers.
- SaaS
- Software as a Service: cloud-based software sold as a subscription rather than a one-off purchase.
- ESG
- Environmental, Social, Governance: sustainability and governance criteria for ethical business.
- SDG
- Sustainable Development Goals: the 17 United Nations development goals for 2030.
- Network effect
- A product becomes more valuable the more people use it (e.g. marketplaces, social networks).
- Pivot
- Strategic realignment of the business model based on market feedback or changed conditions.
- Moat
- A structural competitive advantage that makes market entry harder for competitors.
- KI / AI
- Artificial Intelligence: computer-based systems that simulate human cognition.
- API
- Application Programming Interface: a standardised interface for communication between software systems.
- Gross profit
- Revenue minus the costs that only occur when you sell. What is left has to cover rent, salaries and every other running cost.
- Firmographics
- The attributes used to describe business customers: industry, headcount, revenue, number of sites. The counterpart to age and location for private customers.
- Superiority claim
- Advertising that claims to be the best, biggest or fastest. In the EU and the UK it is only permitted if the claim is true, the lead is clear and it lasts for some time.
- Special data categories
- Data on health, religion, political opinion, union membership, ethnic origin and sexual orientation. The GDPR prohibits processing them apart from narrow exceptions, and ad audiences are not one of them.
Read next
Validating a business idea: the 5-step testHow to find out in two weeks whether your idea holds up, before you invest money and months.4 minThe Business Model Canvas, explained simplyThe nine building blocks of your business model, with a worked example.3 min
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