What is the term for a word formed by first letters of name or phrase?

The term for a word formed by the first letters of a name or phrase is acronym.

For example:

* NASA is an acronym for National Aeronautics and Space Administration.

* NATO is an acronym for North Atlantic Treaty Organization.

* VIP is an acronym for Very Important Person.

It's important to note that an acronym is pronounced as a word, unlike an initialism, which is pronounced by saying each letter individually (e.g., FBI, USA).