ARR

Definition

Annual Recurring Revenue -- the amount of subscription money a company expects to collect over a year, assuming nobody cancels, which they will. It's the startup metric most likely to appear in fundraising decks and least likely to match reality.

Example Usage

"Our ARR is $5 million, which is technically true if you annualize last Tuesday, which was our best day ever and will never happen again."

Related Terms

Beginner

SaaS

Software as a Service -- a business model where customers pay monthly to rent software they'll never own, like a never-ending apartment lease for your data. It's the tech industry's greatest invention: turning a one-time purchase into a lifetime of recurring payments.

🚀 Startup / VC

Intermediate

Go-to-Market

The strategy for launching a product to customers, which in startup land typically involves a 90-slide deck, a Slack channel called launch-war-room, and a blog post nobody reads. It's called go-to-market because go-to-three-customers-who-are-your-friends doesn't sound as impressive.

🚀 Startup / VC

Advanced

Down Round

A funding round where a company raises money at a lower valuation than the previous round, which is the startup equivalent of your house being appraised for less than you paid for it, except everyone on Twitter knows about it. Morale is measured in tears per employee.

🚀 Startup / VC

Intermediate

fund lifecycle

The typical 10-year lifespan of a venture capital fund from raising money to returning capital to LPs, with investment happening in years 1-5 and exits in years 5-10. It's why your VC keeps asking about your exit timeline.

🚀 Startup / VC

Intermediate

option pool

A reserve of shares set aside to recruit employees with stock options, typically carved out before valuation to dilute founders rather than investors. A necessary evil that feels like robbery when you're calculating founder ownership.

🚀 Startup / VC

Intermediate

tourist investor

A venture capitalist or firm that sporadically invests in startups outside their expertise or thesis, usually during hype cycles. They show up for the party, leave before cleanup, and wonder why founders don't return their calls.

🚀 Startup / VC

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