An AI startup is a company whose product depends on artificial intelligence or machine learning as a core differentiator. The category breaks into three distinct archetypes: foundation model labs (OpenAI, Anthropic, Google DeepMind, Meta AI training the largest models), AI infrastructure (Hugging Face, LangChain, Pinecone, Weights & Biases providing tooling), and AI application companies (Cursor, Perplexity, Harvey, Glean building products on top of foundation models). Each archetype has fundamentally different economics, capital requirements, and defensibility characteristics. Understanding which category your AI startup falls into is the first step in evaluating its moat.
The three categories:
Foundation model labs:
The context window is the maximum number of tokens a large language model can process in a single input (prompt plus output). It is determined by the model's architecture and training. Everything the model can "see" for a query (instructions, examples, context, conversation history, reference documents) must fit within this token budget, making the limit one of the most consequential constraints in designing LLM applications. It's the size of the model's working memory for any given request.
The token math:
1 token ≈ 0.75 English words (rough approximation). 1 token ≈ 4 characters of English text.
So a 100,000-token context window holds roughly 75,000 words, or about 300 pages of a typical book.
How context windows have grown...
Accounts Receivable (A/R) is the balance-sheet asset that tracks money customers owe for products or services already delivered but not yet paid for. It's recorded as a current asset because the company has a legal claim to be paid, and tracked with aging buckets (0-30 days, 31-60, 61-90, 90+) that reveal how quickly customers are actually paying. A/R represents revenue that's been recognized but not yet collected; healthy A/R turns into cash on time; aged A/R becomes collection risk.
The basic mechanics:
Customer signs a $50K contract with Net-30 payment terms. Service is delivered (or in SaaS, the recognized portion is delivered). On the day of invoice:
A balance sheet is the financial statement showing a company's assets, liabilities, and stockholders' equity at a specific point in time. Unlike the P&L and cash flow statements that cover a period, the balance sheet is a snapshot, and the fundamental equation Assets = Liabilities + Equity always holds (hence "balance"). It is one of the three core financial statements (P&L, balance sheet, cash flow) that together provide a complete view of financial position. Balance sheets are more important at later-stage and public companies than at early-stage startups, where most items are minimal and cash is the only meaningful asset.
The standard balance sheet structure:
Assets (what the company owns):
Current Assets (convertible to ca...
A bottoms-up forecast is the projection methodology that builds revenue, costs, and other projections from specific underlying drivers rather than top-down market-share assumptions. Drivers include customer counts by month, ARPC by segment, conversion rates, deal sizes, and sales rep productivity, rather than vague claims like "1% of a $50B market." It produces projections that are testable, defensible, and credible to sophisticated investors because the math is built from observable inputs. It is the methodology that distinguishes rigorous financial modeling from optimistic projection.
The bottoms-up approach:
Identify driver components:
A business plan is the written document describing a company's business model, target market, competitive position, operating strategy, team, and financial projections. It's used to align stakeholders and guide execution. Modern startup business plans rarely take the form of the traditional 30 to 40 page document; they more often appear as a pitch deck, a one-page Lean Canvas, or a short narrative memo.
The traditional business plan, with its executive summary, market analysis, organizational structure, marketing plan, operations plan, and 3 to 5 year financial projections, originated in mid-twentieth-century corporate planning and remains the format banks and SBA loan officers expect. For startups, the format has shifted. Mos...
Business strategy is the integrated set of choices that determines how a company creates and captures unique value. It includes which markets to serve (and which to exclude), how to position relative to competitors, what to build vs buy vs partner for, how to win in chosen markets, and what trade-offs to accept. The discipline is making explicit choices that produce a differentiated position rather than defaulting to generic "be excellent everywhere" non-strategy that produces no actual competitive advantage. Strategy is choices; without choices, there's no strategy.
What strategy actually is (per Michael Porter and others):
Choices about scope:
The foundational vocabulary every founder needs before everything else. This cluster covers what a startup actually is, the categories that distinguish them (bootstrap vs venture-backed, lifestyle vs scale-up), the support ecosystem (accelerators, incubators, agencies), the early credits and grants founders chase, and the structural concepts (founder-market fit, why startups fail) that shape every decision that follows. 21 entries.
If you're new to startup vocabulary, start here. If you're a few years in, this cluster is the conceptual baseline against which everything else is read.
Accounts Payable (A/P) is the balance-sheet liability tracking money a company owes vendors for goods or services received but not yet paid for. It's recorded as a current liability because the company has an obligation to pay, with payment timing managed strategically to balance cash flow against vendor relationships. A/P is the mirror image of A/R: where A/R is what customers owe the company, A/P is what the company owes others.
The basic mechanics:
Company receives an invoice from a software vendor for $10K with Net-30 terms. On the day of receipt:
30 days later, company ...