Path to Profitability

Definition

A theoretical timeline for when a company will stop losing money and become self-sustaining; usually a fictional document written for investors.

Example Usage

Our path to profitability assumes 300% YoY growth and zero price competition, so we're totally on track for 2027.

Origin

Business planning terminology

Fun Fact

Most startups' paths to profitability ignore competition, churn rate, and market saturation

Source: Financial planning terminology

Related Terms

Intermediate

network effects

The magical property where your product becomes more valuable as more people use it—or what every social startup claims to have despite zero evidence. True network effects are rarer than honest user growth numbers.

🚀 Startup / VC

Advanced

protective provisions

Veto rights that let preferred shareholders block certain major decisions like selling the company or raising more money. Democracy in theory, oligarchy in practice.

🚀 Startup / VC

Advanced

synthetic exit

Restructuring that gives early investors and employees liquidity without selling the company, like a pressure release valve for cap table tension. An exit without the exit.

🚀 Startup / VC

Beginner

founder-friendly

A marketing term VCs use to describe their approach, supposedly indicating fair terms and supportive behavior. In practice, it often means 'we won't screw you quite as hard as the other guys.'

🚀 Startup / VC

Intermediate

change of control

Any transaction that transfers majority ownership or control of a company, typically triggering various contractual provisions like vesting acceleration, payment obligations, or approval rights. The legal definition of when your startup stops being yours.

🚀 Startup / VC

Intermediate

diluted

The soul-crushing moment when a founder's ownership percentage shrinks because the company issued more shares to new investors. It's weaker coffee, but for equity—you still own shares, they're just worth relatively less of the pie. Every funding round brings this special joy, where you simultaneously celebrate getting money and mourn losing control.

🚀 Startup / VC

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