Glossary Category: Startup Basics

A founder is the person (or one of the people) who starts a company — writing the first line of code, making the first sale, or simply deciding the idea is worth quitting a stable job for. Being a founder is a role, not just a title: it comes with legal ownership (usually the largest single equity stake early on), personal financial risk, and the responsibility to make decisions when there’s no playbook to follow yet.

Founders differ from early employees in one key way: employees can usually walk away with limited consequences, while founders typically have their own money, reputation, and years of unpaid or underpaid effort tied to the outcome. This is why investors weight “founder-market fit” heavily — whether this specific founder has a real, credible reason to be the one solving this particular problem — often as much as the idea itself.

Not every founder stays CEO forever. Some step back into other roles (CTO, chairman) as a company scales and professional management comes in, while remaining a founder in the historical and legal sense permanently.

🇵🇭 Philippine Example

Paul Rivera left a job at Google to move back to Manila and eventually founded Kalibrr, an online recruitment platform, after first running an outsourcing company and discovering how badly the Philippine BPO industry's hiring and skills-matching process was broken.

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A co-founder is anyone who joins the founding team early enough to receive founder-level equity and founder-level responsibility — not just an early hire with a generous stock option grant. Most successful startups have two or three co-founders rather than one, because building a company well usually requires different strengths at once (for example, one person who can build the product and another who can sell it) that are hard to find in a single person.

Co-founder relationships are also one of the most common reasons startups fail — not because the idea was bad, but because the founders disagreed on equity splits, roles, or direction, and never wrote anything down. This is why experienced investors ask new co-founding teams whether they have a formal founders’ agreement and equity vesting schedule (so someone who leaves after two months doesn’t keep a permanent quarter of the company) before writing a check.

Co-founders don’t need to have known each other for years beforehand, but a shared track record of working together — even briefly — is generally seen as a stronger signal than two strangers deciding to start a company together after one dinner.

🇵🇭 Philippine Example

PayMongo, the Philippine payments startup later backed by Stripe and accepted into Y Combinator, was started in 2019 by four co-founders — Francis Plaza, Jaime Hing II, Luis Sia, and Edwin Lacierda — who had each worked with at least one other member of the group on a previous project before founding the company together.

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An MVP (Minimum Viable Product) is not a smaller, buggier version of the “real” product — it’s the smallest thing a team can put in front of real users that still lets them learn something true about whether the idea works. The point of an MVP is speed of learning, not polish: a founder who spends a year building a fully-featured app before showing it to a single customer has skipped the entire purpose of an MVP.

A common mistake is treating “MVP” as an excuse to ship something broken or unfinished — the “viable” part matters as much as the “minimum” part. A good MVP still has to work well enough that a real user’s reaction (do they come back, do they pay, do they tell a friend) is a genuine signal, not just frustration at a broken product.

MVPs can take many forms beyond a stripped-down app: a landing page that measures signups before anything is built, a manual “concierge” service done by hand before it’s automated, or — as often happens — a full working app that only reveals its real value once actual users start using it in ways the founders didn’t expect.

🇵🇭 Philippine Example

Kumu, now the Philippines' leading livestreaming and social commerce app, began in 2017–2018 as a simple messaging app with a livestreaming feature added on. Of the first few thousand people who downloaded it, only around twenty or thirty stuck around — but the founders noticed that small group was almost exclusively using the livestream feature, a signal from that early, unpolished version that shaped everything Kumu became.

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Product-market fit (PMF) describes the moment a startup stops pushing its product on an indifferent market and instead finds a market pulling the product out of its hands. Before PMF, growth is a struggle — the team has to convince, discount, and chase every user. After PMF, growth becomes noticeably easier: usage sticks, word-of-mouth kicks in, and the hardest problem shifts from “will anyone want this” to “how do we keep up with demand.”

PMF is famously hard to define with one number, but founders and investors look for practical signs: customers get upset if the product goes down, retention curves flatten out instead of decaying to zero, and a large share of new users arrive through referrals rather than paid marketing. Marc Andreessen’s original description — that you can always feel when product-market fit is not happening — is still widely quoted because PMF is something a founder senses in daily usage data before it shows up cleanly in a slide deck.

PMF is not permanent. A product can have it, lose it as the market shifts, and need to find it again — which is one reason mature companies still watch retention and organic growth numbers closely, not just revenue.

🇵🇭 Philippine Example

Kumu's founders have described noticing their real signal for product-market fit not from download numbers, but from watching a tiny group of early, mostly-abandoned users obsessively return to one specific feature — livestreaming — which the team then leaned into fully. That signal eventually scaled into Kumu becoming one of the most-used social and livestreaming apps in the Philippines.

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A pivot happens when a startup’s original plan isn’t working the way founders hoped, but something adjacent to it clearly is — so the team deliberately changes direction instead of shutting down or blindly continuing. A pivot is different from simply failing: it’s a founder using real evidence (what customers actually respond to, not what the founders originally assumed) to redirect the company toward a version of itself that has a real chance of working.

Pivots come in different shapes: a “zoom-in” pivot narrows a multi-feature product down to the one feature customers actually love; a customer-segment pivot keeps the same product but sells it to a different type of buyer; and a full business-model pivot changes how the company makes money entirely (for example, moving from a one-time sale to a subscription). Not every difficult moment calls for a pivot — knowing when to pivot versus when to simply push through a hard patch is one of the genuinely difficult judgment calls in running a startup.

A pivot is generally seen as a sign of good judgment, not failure, as long as it’s grounded in real evidence rather than founder boredom or a reaction to one bad week.

🇵🇭 Philippine Example

Kalibrr, one of the Philippines' best-known online recruitment platforms, began in 2012 as an education and skills-training platform aimed at helping Filipinos improve their English and technical skills for BPO jobs. As the company grew, it shifted its core business model toward becoming a direct job-matching marketplace — a real, documented pivot in how the company made money and what it primarily offered users.

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A bootstrapped startup funds its own growth — through founder savings, early customer revenue, and sometimes a day job on the side — instead of raising money from angel investors or venture capital firms. The main trade-off is speed versus control: a bootstrapped company usually grows more slowly because it can only spend what it actually earns, but the founders keep full ownership and full decision-making power, with no investor board seat or exit-timeline pressure.

Bootstrapping tends to work best for businesses that can become cash-flow positive relatively early — software or services companies with real paying customers from the start — rather than businesses that need heavy upfront capital (hardware, biotech, anything requiring years of R&D before any revenue) where outside funding is close to unavoidable.

Many founders bootstrap for a period before ever raising money, either by necessity (no investor said yes yet) or by choice (avoiding dilution and control loss), and switch to outside funding later once the business already has traction to negotiate from a position of strength.

🇵🇭 Philippine Example

Multisys Technologies was started by David Almirol Jr., a former overseas Filipino worker who returned home from Iraq with his own savings and built the company gradually from a small computer retailing and freelance programming business, without early outside investment. Multisys grew into one of the Philippines' larger government and enterprise software providers before being acquired by PLDT in 2025.

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Burn rate measures how fast a company’s cash balance is shrinking, typically expressed as a monthly figure. “Gross burn” is total monthly spending; “net burn” subtracts whatever revenue is coming in, and it’s net burn that actually determines how long the company’s cash will last. A pre-revenue or early-revenue startup almost always has a negative net burn — spending more than it earns — because it’s deliberately investing ahead of proven revenue to grow faster.

Burn rate only becomes dangerous when it’s not matched by a clear plan for what that spending is buying (growth, product development that will pay off) or by a realistic path to slowing it down before cash runs out. Investors watch burn rate closely alongside revenue growth, because a high burn rate paired with slow growth is one of the clearest warning signs of a startup in trouble, regardless of how good the underlying idea is.

Founders usually manage burn rate actively — deciding what to cut and what to protect — rather than letting it run on autopilot, since every peso of unnecessary burn shortens the company’s runway.

🇵🇭 Philippine Example

Angkas, the Philippines' largest motorcycle ride-hailing platform, was reported in 2026 analysis (citing its own financial disclosures) to be spending nearly ₱5 for every ₱1 it earned, with a net loss margin of about -79% and negative free cash flow of roughly ₱493 million for the year — a clear, publicly documented example of a heavy burn rate.

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Runway is simply a startup’s remaining cash balance divided by its monthly net burn rate — if a company has ₱12 million in the bank and is burning ₱2 million a month, it has six months of runway. Runway is one of the most important numbers a founder tracks, because it sets a hard deadline: raise more money, become profitable, or cut costs before the runway runs out, with no fourth option.

Experienced founders generally start raising their next round well before runway gets critically short — commonly when 6 to 9 months remain — because fundraising itself takes months, and negotiating from a position of “we have plenty of cash but want to raise on good terms” is far stronger than negotiating from “we run out of money in six weeks.”

Runway can be extended two ways: raising more cash, or cutting burn rate (slower hiring, reduced spending) — most startups facing a runway crunch end up doing some combination of both rather than relying on either alone.

🇵🇭 Philippine Example

By the end of 2025, Angkas' cash reserves had reportedly fallen about 72%, from roughly ₱642 million to about ₱177 million, giving the company an estimated runway of only seven to eight months at its then-current burn rate — a real, publicly reported illustration of how quickly runway can shrink once burn outpaces revenue.

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MRR (Monthly Recurring Revenue) is the total subscription revenue a company can count on receiving every month from customers who are actively paying, excluding one-time fees or non-recurring income. It’s the core health metric for any subscription (SaaS) business, because unlike a lump-sum sale, MRR compounds — new customers add to it, upgrades expand it, downgrades and cancellations shrink it, and the net of all of that each month tells you whether the business is genuinely growing.

Investors and founders break MRR down into components — new MRR, expansion MRR (existing customers paying more), contraction MRR, and churned MRR — because two companies with identical total MRR can have very different underlying health depending on how much of their growth is offset by customers leaving or downgrading.

MRR is usually only meaningful for businesses with genuinely recurring subscription revenue; applying it to a business built mostly on one-time transactions or project fees can create a misleading picture of stability that doesn’t actually exist.

🇵🇭 Philippine Example

Sprout Solutions, a Philippine HR and payroll technology company, has publicly discussed crossing $10 million in annual recurring revenue in 2023 — which, broken down across twelve months, reflects roughly the scale of monthly recurring revenue a maturing Philippine SaaS business can reach with enterprise and corporate clients.

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ARR (Annual Recurring Revenue) is MRR expressed on a yearly basis, and it’s the number most commonly used when discussing a SaaS company’s overall scale, especially in fundraising or acquisition conversations — “we’re a $10 million ARR company” is a much more common way founders describe size than the monthly figure. ARR is a run-rate figure, meaning it reflects what current recurring revenue would total over a year if nothing changed, not revenue actually collected over the past twelve months.

ARR matters heavily in SaaS valuations because investors and acquirers often price recurring-revenue software companies as a multiple of ARR, rather than using traditional profit-based valuation methods used for other kinds of businesses — a reflection of how predictable and durable recurring revenue is seen as, compared to one-time sales.

Like MRR, ARR should only include genuinely recurring subscription revenue; mixing in one-time implementation fees or services revenue inflates the figure and misrepresents the durability investors are actually trying to measure.

🇵🇭 Philippine Example

Sprout Solutions was reported to be anticipating crossing $10 million in annual recurring revenue by the second quarter of 2023, and has since gone on to raise further funding while pursuing regional expansion — a real, publicly reported ARR milestone for a Philippine-founded SaaS company.

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