Resources

The Arbo Glossary

Welcome to the Arbo Glossary! This concise and comprehensive resource provides definitions and explanations of key accounting, finance, and startup terms.

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    Accounting & Tax

    83(b) Election

    An 83(b) election allows individuals who receive stock as compensation to pay taxes on the value of the stock at the time it was granted rather than...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Amortization

    Amortization is the process of spreading the cost of an asset or loan over a period of time. It involves systematically allocating the expense rather...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    C Corporation (C Corp)

    A C corporation is a legal business entity structure commonly chosen by startup founders. It provides limited liability protection to shareholders...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Contribution Margin

    The contribution margin is the difference between a company's revenue from sales and its variable costs directly associated with producing or...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Cost of Goods Sold (COGS)

    The cost of goods sold represents the direct costs incurred by a company in producing or delivering its products or services. It includes expenses...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Deferred Revenue

    Deferred revenue, also known as unearned revenue or customer deposits, refers to money received by a company for products or services that have not...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Delaware Annual Report

    A Delaware annual report is a filing requirement for businesses incorporated in Delaware. It must be submitted to the Delaware Secretary of State by...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Depreciation

    Depreciation is the accounting practice of allocating the cost of tangible assets (such as equipment, buildings, or vehicles) over their useful life.

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Doing Business As (DBA)

    Doing Business As (DBA) refers to a fictitious name or trade name that a business can use instead of its legal name or the name of its legal business...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    EBITDA

    Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric that provides insight into a company's operating...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Form 6765

    IRS Form 6765 is a tax form used to claim the Research & Development (R&D) tax credit

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Form D

    Form D is a filing with the Securities and Exchange Commission (SEC) required when a company offers and sells securities without registering the...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Form S-1

    Form S-1 is a registration statement filed with the Securities and Exchange Commission (SEC) by companies planning to go public through an initial...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Form SS-4

    IRS Form SS-4 is the application form used to obtain an Employer Identification Number (EIN) for a business

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Gross Margin

    Gross margin represents the percentage of revenue remaining after deducting the direct costs associated with producing goods or delivering services.

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Limited Liability Company (LLC)

    An LLC is a legal business entity that combines the benefits of limited liability protection with the flexibility of a partnership.

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Net Profit

    Net profit, also referred to as the bottom line, is the remaining profit after deducting all expenses, including operating costs, taxes, and...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Net Profit Margin

    Net profit margin is the percentage of revenue that translates into net profit after deducting all expenses. It indicates the profitability and...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    Quick Ratio

    The quick ratio is a liquidity ratio that measures a company's ability to meet short-term financial obligations using its most liquid assets. SaaS...

    Arbo Team Jul 19, 2023
    Accounting & Tax

    S Corporation (S Corp)

    An S Corporation (S Corp) is a business entity that elects to pass corporate income, losses, deductions, and credits through to its shareholders.

    Arbo Team Jul 19, 2023
    Finance

    Burn Rate

    The burn rate represents the rate at which a company spends or loses money over a specific period. It indicates how quickly a company is depleting...

    Arbo Team Jul 19, 2023
    Finance

    Dollar-Based Net Expansion Rate (DBNER)

    Dollar-Based Net Expansion Rate (DBNER) is a metric used to measure the revenue growth generated from existing customers through add-ons, upselling,...

    Arbo Team Jul 19, 2023
    Finance

    Fair Market Value (FMV)

    Fair Market Value (FMV) represents the current value of a company's common shares or other assets. For public companies, FMV can be determined by the...

    Arbo Team Jul 19, 2023
    Finance

    Forecasts

    Forecasts are data-driven estimates of a company's future financial performance. They are essential for making informed business decisions, setting...

    Arbo Team Jul 19, 2023
    Finance

    Fractional CFO

    A fractional CFO, a virtual or outsourced CFO, is an external financial professional or firm that provides part-time CFO services as needed

    Arbo Team Jul 19, 2023
    Finance

    Free Cash Flow (FCF)

    Free Cash Flow (FCF) is the cash generated by a company's operations after accounting for operating expenses and capital expenditures.

    Arbo Team Jul 19, 2023
    Finance

    Gross Merchandise Value (GMV)

    GMV is the total value of products sold through an eCommerce platform within a specific period.

    Arbo Team Jul 19, 2023
    Finance

    Key Performance Indicator (KPI)

    KPIs are quantifiable metrics that help measure and evaluate the performance of a business.

    Arbo Team Jul 19, 2023
    Finance

    Last Twelve Months (LTM)

    LTM, also called trailing twelve months (TTM), is a period of the most recent twelve consecutive months used for financial analysis and valuation.

    Arbo Team Jul 19, 2023
    Finance

    Lock-Up Period

    A lock-up period is a specific duration following an initial public offering (IPO) during which certain shareholders, including founders, employees,...

    Arbo Team Jul 19, 2023
    Finance

    Magic Number

    The magic number is a sales efficiency metric used by SaaS companies to assess the relationship between sales and marketing expenses and the...

    Arbo Team Jul 19, 2023
    Finance

    Month Over Month (MoM)

    MoM compares data or performance indicators between two consecutive months. It is commonly used to analyze growth rates, revenue changes, or other...

    Arbo Team Jul 18, 2023
    Finance

    Monthly Recurring Revenue (MRR)

    MRR is the sum of the revenue generated from recurring subscriptions or services within a single month.

    Arbo Team Jul 18, 2023
    Finance

    Net Dollar Retention (NDR)

    NDR, also known as net revenue retention, measures the revenue retained from existing customers, accounting for both expansion and churn.

    Arbo Team Jul 18, 2023
    Finance

    Outsourced Controller

    An outsourced controller is an external professional or firm that handles a company's accounting and financial management on a part-time or...

    Arbo Team Jul 18, 2023
    Finance

    Runway

    Runway refers to when a company can operate without running out of cash. It is calculated by dividing the available cash balance by the average...

    Arbo Team Jul 18, 2023
    Finance

    Trailing Twelve Months (TTM)

    Trailing twelve months (TTM), also referred to as the last twelve months (LTM), represents a consecutive twelve-month period immediately preceding...

    Arbo Team Jul 18, 2023
    Finance

    Year to Date (YTD)

    Year to Date (YTD) refers to the period from the beginning of the current year or fiscal year to the present date. It is used to analyze financial...

    Arbo Team Jul 18, 2023
    Operations

    Capital Expenditures (CapEx)

    Capital expenditures refer to the funds a company spends to acquire, maintain, or enhance long-term assets. These assets can include tangible items...

    Arbo Team Jul 18, 2023
    Operations

    Cost Per Click (CPC)

    Cost per click is a pricing model used in online advertising where advertisers pay each time a user clicks on their ad. It is commonly used in...

    Arbo Team Jul 18, 2023
    Operations

    Cross-Selling

    Cross-selling refers to selling additional products or services to existing customers.

    Arbo Team Jul 18, 2023
    Operations

    Customer Acquisition Cost (CAC)

    Customer Acquisition Cost (CAC) is the cost to acquire a new customer. It is the total of all expenses, whether in Sales and Marketing allocated...

    Arbo Team Jul 18, 2023
    Operations

    Full-Time Employee (FTE)

    A full-time employee (FTE) is an individual who works a standard number of hours considered full-time within a particular organization or jurisdiction

    Arbo Team Jul 18, 2023
    Operations

    Go-to-Market (GTM)

    A go-to-market (GTM) strategy is a detailed plan that outlines how a company will introduce and promote its products or services to its target market.

    Arbo Team Jul 18, 2023
    Operations

    Net Promoter Score (NPS)

    NPS is a customer satisfaction metric that measures the likelihood of customers recommending a product or service to others. It provides insights...

    Arbo Team Jul 18, 2023
    Operations

    Payback Period

    The payback period refers to the time required to recoup the customer acquisition cost (CAC) through revenue generated by the newly acquired...

    Arbo Team Jul 18, 2023
    Operations

    Ramp Time

    Ramp time represents the period required for a new salesperson to become fully productive and achieve their sales targets. It accounts for the time...

    Arbo Team Jul 18, 2023
    Revenue

    Annual Contract Value (ACV)

    ACV refers to the total value of a customer's annual contract or subscription with a business, regardless of the contract's duration. It is a metric...

    Arbo Team Jul 18, 2023
    Revenue

    Churn

    Churn represents the rate customers stop using a product or service or end their subscription. It is a critical metric for businesses, especially...

    Arbo Team Jul 18, 2023
    Revenue

    Gross Retention

    Gross retention, or gross dollar retention, measures the percentage of revenue a company can retain from existing customers.

    Arbo Team Jul 18, 2023
    Revenue

    Repeat Customer Rate

    Repeat customer rate measures the percentage of customers who make multiple purchases or engage with a business repeatedly over a given period. It...

    Arbo Team Jul 18, 2023
    Revenue

    Retention

    Retention refers to the ability of a business to retain its customers over a specific period. It is a critical metric for customer loyalty and...

    Arbo Team Jul 18, 2023
    Revenue

    Revenue Recognition

    Revenue recognition is recording and reporting revenue in a company's financial statements. It involves determining when revenue should be recognized...

    Arbo Team Jul 18, 2023
    Revenue

    Sales Pipeline

    A sales pipeline is a visual representation of a customer's stages during the sales process, from initial contact to closing a deal. It helps sales...

    Arbo Team Jul 18, 2023
    Revenue

    Sales and Marketing Efficiency

    Sales and marketing efficiency measure the effectiveness of a company's sales and marketing efforts in generating revenue. It assesses the return on...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Accredited Investor

    An accredited investor an individual or entity that meets certain financial thresholds set by the Securities and Exchange Commission (SEC) in the...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Angel Investor

    An angel investor, also known as a seed investor, is an individual who invests personal funds in startup companies in exchange for equity. Angel...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Cap Table

    A capitalization table, or cap table, is a record that outlines the ownership structure of a company.

    Arbo Team Jul 18, 2023
    Startup Terminology

    Convertible Note

    A convertible note is a type of debt instrument commonly used in early-stage fundraising. It is a loan that can be converted into equity at a later...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Data Room

    A data room is a secure location where confidential and privileged information is stored with restricted access. It is commonly used in business...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Double-Trigger Acceleration

    Double-trigger acceleration is a provision related to equity vesting in which an employee's unvested stock or options become fully vested upon two...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Entrepreneur in Residence (EIR)

    An Entrepreneur in Residence (EIR) is an individual, often a former startup founder, who works with a venture capital (VC) firm.

    Arbo Team Jul 18, 2023
    Startup Terminology

    Minimum Viable Product (MVP)

    An MVP is the initial version of a product that includes essential features and functionalities.

    Arbo Team Jul 18, 2023
    Startup Terminology

    Officers

    Officers are individuals appointed by a corporation's board of directors to hold specific executive positions within the company, such as CEO, CFO,...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Option Pool

    An option pool refers to a block of shares set aside by a company to be granted as stock options to employees, typically used as a form of equity...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Pay to Play

    Pay-to-play is a provision that requires existing investors to participate in subsequent funding rounds to maintain their pro-rata ownership stake....

    Arbo Team Jul 18, 2023
    Startup Terminology

    Pitch Deck

    A pitch deck is a presentation of slides to pitch a business idea or investment opportunity to potential investors. It typically includes an overview...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Post-Money Valuation

    The post-money valuation is the value of a company immediately after a financing round, including the newly raised funds. It is calculated by adding...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Pre-Money Valuation

    Pre-money valuation is the value of a company before a financing round or investment. It represents the company's worth based on its assets,...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Pro Rata

    The proportional allocation or distribution of shares, investments, or ownership rights. In startup investments, pro rata rights allow existing...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Product Velocity

    Product velocity refers to the speed at which a company can develop and release new products or features. It is often a crucial factor in staying...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Right of First Refusal (ROFR)

    The right of first refusal (ROFR) is a contractual right that allows a party to enter into a transaction or purchase assets before being offered to...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Roll-Up Vehicle (RUV)

    A roll-up vehicle (RUV) is a specialized entity, such as a special purpose vehicle (SPV), formed to aggregate investments or assets in a particular...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Serviceable Obtainable Market (SOM)

    The portion of the serviceable available market (SAM) a company can realistically capture or penetrate. It considers factors such as competition,...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Simple Agreement for Future Equity (SAFE)

    SAFE is a financial instrument used in early-stage startup funding. It allows investors to provide capital in exchange for the right to convert their...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Special Purpose Vehicle (SPV)

    An SPV is a legal entity created for a specific purpose, often to isolate financial risk or facilitate investment. It can pool funds from multiple...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Venture Capital Associate

    A venture capital associate is a junior-level professional working at a venture capital firm. They support investment activities, conduct due...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Venture Capital Partner

    A venture capital partner is a senior member of a venture capital firm responsible for leading investment decisions, managing portfolio companies,...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Venture Capital Principal

    A venture capital principal is a mid-level professional in a venture capital firm. They typically have more experience than associates and play a key...

    Arbo Team Jul 18, 2023
    Accounting & Tax

    Delaware Franchise Tax

    The Delaware Franchise Tax is a fee imposed on businesses incorporated in Delaware. It is unrelated to franchised businesses but applies to many...

    Arbo Team Jul 18, 2023
    Accounting & Tax

    Qualified Small Business Stock (QSBS)

    QSBS refers to stock issued by a qualified small business that may qualify for certain tax benefits, such as excluding capital gains upon its sale,...

    Arbo Team Jul 18, 2023
    Revenue

    Serviceable Available Market (SAM)

    SAM represents the portion of the total addressable market (TAM) that a company can effectively target and serve with its products or services based...

    Arbo Team Jul 18, 2023
    Accounting & Tax

    Annual Recurring Revenue (ARR)

    Annual Recurring Revenue (ARR) is recurring revenue, as defined by your revenue recognition policy, calculated annually. ARR is the sum of...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Vesting Acceleration

    Vesting acceleration refers to the acceleration of equity or stock vesting for an individual, allowing them to receive ownership rights ahead of the...

    Arbo Team Jul 18, 2023
    Revenue

    Average Revenue Per User (ARPU)

    ARPU is a metric technology, media, and telecom companies use to calculate the average revenue generated per customer or user. It helps measure the...

    Arbo Team Jul 18, 2023
    Revenue

    Billings

    Billings represent the amount of money that has been invoiced for goods or services and will be paid in the near future. It is a measure of a...

    Arbo Team Jul 18, 2023
    Startup Terminology

    Board Director

    Board directors are individuals elected by shareholders to oversee a company's management and strategic direction. They make important decisions and...

    Arbo Team Jul 18, 2023
    Revenue

    Bookings

    Bookings refer to the total value of signed contracts when a client commits to purchasing products or services from a company. It represents the...

    Arbo Team Jul 18, 2023
    Finance

    Burn Multiple

    The burn multiple measures a company's capital efficiency. It is calculated by dividing the net cash burned (cash used by the company) by the net new...

    Arbo Team Jul 18, 2023
    Finance

    Cohort Analysis

    Cohort analysis involves dividing customers or users into groups based on a shared characteristic or timeframe, such as their sign-up month.

    Arbo Team Jul 18, 2023
    Finance

    Basis Point

    A basis point equals one-hundredth of a percentage point (0.01%). It is commonly used in finance to measure small changes in interest rates, bond...

    Arbo Team Jul 18, 2023

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