Startup Terms Every Entrepreneur Should Know
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If are planning to start your startup business then definitely you will need to describe what your company does when you want to raise capital from investors. You need to speak their language too, it is also called startup lingo. It is wise to know the vocabulary that is common in the circuit to showcase your business plan effectively. These words are also called jargon words.
Following is the list of startup jargon that every aspiring entrepreneur should know about. According to the dictionary, jargon words mean special words or expressions used by a professional or group that are difficult for others to understand.
In this article, we've shared some commonly used startup terms from Bootstrapping to Market penetration which you may not have heard yet if you already know these new business terms then also you can learn more about them to enhance your knowledge about startup and entrepreneurship.
Before diving into these startup terms let's first find out What a startup is?
What is a Startup?
Startup Terms Every Entrepreneur Should Know
What is a Startup?
A startup is any company that is in its infant stage and founded by one or more entrepreneurs to launch a unique product or service. Well everyone having a different perspective suggests a variety of definitions, but the popular one given by Wikipedia is as - "A startup or start-up is a company started by an entrepreneur to seek, develop, and validate a scalable economic model."
So, now let's move to the Startup terminology every entrepreneur should know if you are planning to get funding.
Startup Terms Every Entrepreneur Should Know
Activation
Activation is a measurement of the conversion rate from when a prospective lead becomes an active user on your website. This is a result of a user downloading or signing up for your app/website.
Acqui-hire
It is a strategy used to acquire talent when one company buys out another company primarily for the skills and expertise of the staff.
Accelerator
An accelerator is a center where startups are “incubated” through mentorship, space and sometimes money. Accelerators help startups in their initial stages and help them grow.
Advertorials
This is a startup lingo commonly used by bloggers. It is a paid form of content that is meant to look and feel like a real story or blog post. In recent times, display ad pricing and effectiveness have decreased so turning to advertorials is a better option for companies to capture ad revenue.
Agile
Agile means flexible and adaptable. Startups use a flexible approach to their project management and product development.
Angel Investor
An angel investor is an individual who provides initial funding to a startup business, believing in the idea, concept, or solution, and offering the necessary capital for the entrepreneurs to kickstart their venture.
Bootstrapping
Bootstrapping is the use of money that is taken from friends and family, existing resources or personal savings as the initial investment to start a business. If a founder chooses to bootstrap their startup they avoid raising funds from investors or VC.
Lakshya Singh
Bootcamp
Bootcamps are intensive learning courses designed to provide individuals and offices with the knowledge, know-how, and abilities necessary for success in a particular field.
Bridge Loan
A Bridge Loan is usually a short-term loan taken to meet the temporary financial requirement until a more permanent or long-term financing option can be secured. It is usually for a period of two weeks to three years to bridge the credit gap in between rounds of funding.
Bubble
Bubble or Startup Bubble is a time when investors are willing to invest a high amount of money in startups, which makes their valuation extremely high.
Burn Rate
If you are a startup founder, this is one of the most important startup jargon you need to know. It is also called Run Rate, in simple words, it means how fast you are blowing your cash. Investors try to avoid putting their money where the burn rate is excessive. But it is also not unusual for the startup to lose sums of money for several years before breaking or making a profit.
Churn Rate
It is also called the rate of attrition. Churn Rate is known as the percentage of service subscribers who discontinue their subscriptions within a given period. The growth rate must exceed its churn rate.
Cliff
Cliffs are a way for an Executive to fire employees or let them leave without giving them stock within a limited period. Cliffs are also used by the investors on CEOs to make sure the CEO sticks around after getting the cash.
Convertible Note
A Convertible Note is also known as a Convertable bond, it means a debt that transforms into equity in the company's financing round in the future. The investor who invests the money instead of getting their loan back with interest receives the equity of the company in the form Convertible Note.
Coworking Space
This is like a shared office where different people or small companies can work together in a shared environment. This model works well with startups because they pay less rent, and share amenities like meeting rooms and internet access with other offices.
Crowdfunding
A way to raise money for projects or businesses is by getting small contributions from a large number of people, often through online platforms. It's like a collective effort where many people chip in to support an idea, cause, or concept they believe in.
Customer Acquisition Cost (CAC)
The amount of money a business spends on average to acquire a new customer. It includes expenses like marketing, advertising, and sales activities, and is calculated by dividing the total acquisition expenses by the number of new customers added during a specific period.
Deck
Also called ‘Pitch Deck’, it is a short and limited slide of PPT that covers all the aspects of your aspects. It usually contains ten slides. The deck should be compact, concise and create a maximum impact. One should consider gaining a lot of feedback and hiring a graphic designer to make the final version look spectacular.
Disruptive Technology
The discovery of such technology completely changes the way society does something. For Example, Uber and Ola changed the way Taxis used to operate. Amazon or Flipkart is a virtual store that did not exist about two decades ago, there was physical in-store shopping.
Dragon
They are rare startup companies that were able to raise $1 billion in a single round. For example: Airbnb, Flipkart, and Tumblr.
Early Adopters
It refers to individuals or businesses who are among the first to embrace and use a new product, service, or technology. These individuals are willing to try innovative solutions despite potential risks and uncertainties.
Exit Strategy
It is a plan that is executed by an investor, trader, business owner, or venture capitalist to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria for either have been met or exceeded. It is a strategy on how you will sell the company and make your investors some financial gain through the same. It includes all the decisions like who is going to buy and why and at which amount.
FMA
FMA is the First Mover Advantage and it means an advantage gained by the initial significant occupant of a market segment. First-mover advantage might be gained by technological leadership, early purchase of resources, or releasing some product/service that is ahead of its time.
Freemium
Freemium is a form of pricing strategy by which a product or service is provided free of charge, but an amount in the form of premium is charged for additional features, services, or virtual. For example, a digital offering or an app such as Netflix charges a premium before you can avail of a free trial.
Gamify
Gamify means adding game-like elements in the marketing of your products so that you can create engagement with your customers and potential customers.
Go Public
Taking the startup public by offering shares on a stock exchange, allows investors and founders to sell shares to the public.
Growth Hacking
Growth Hacking is a startup term that was coined by Sean Ellis and it describes a marketing technique that focuses on quickly finding scalable growth through non-traditional and inexpensive tactics such as the use of the internet or social media. The objective of growth hacking strategies is generally to acquire as many users or customers as possible while spending as little as possible.
Hockey Stick
It refers to a financial or economic trend that matches the shape of a hockey stick. One can say it is like a growth pattern depicted on a graph, where the initial growth is slow or flat (the handle of the hockey stick), followed by a sudden and steep upward trajectory (the blade of the hockey stick).
Incubator
A company or program that provides support, resources, and guidance to early-stage startup business houses. Incubators often have a fixed duration during which startups can benefit from the offered resources and mentorship.
Intellectual Property
An IP can be a patent or a secret sauce or formula like Coca-Cola's recipe. It is a creation of such an invention, artistic work, design, symbol, name, and image used in commerce.
Iterate
In simple words iterate means to try something, do it wrong, and then try it again in a slightly different way with the hopes of achieving a better result. This startup jargon is also used when an entrepreneur launches a product or service in the market.
Launch
A commonly used startup lingo is Launch. The launch means to introduce and start something new, for instance, a company, a website, or a product.
Lean
The goal of lean is to use the least amount of resources possible. It emphasizes a systematic approach to building and managing startups. It favors experimentation over elaborate planning and client feedback over intuition.
Leverage
Leverage is an investment strategy that is used while we take into consideration an amount that is borrowed – borrowed capital. It focuses on the use of various financial instruments to increase the potential return on investment. In accounting terms, leverage also means the amount of debt a firm uses to finance assets.
Loss Leader Pricing
The type of pricing where you are selling something at a loss as a form of marketing expense to bring in customers you expect to repeat future purchases from.
Vidhi Punamiya
Market Penetration
Market Penetration is a measure of the number of sales, adoption, and presence of a product or service compared to the total theoretical market for that product or service. The startup phrase also means to include the activities that are used to increase the market share of a product or service.
Monetize
The term means something is converted from a non-revenue generating asset into a source of revenue. In economics, monetizing means converting any object or transaction into a form of currency or something that has transferable value.
MVP
MVP stands for Minimum Viable Product and it means a product with just enough features to satisfy early consumers and to provide feedback for future product development. It is a bare-bones version of a product required to achieve proof of concept and is often used in the creation of new software that will be beta-tested so that later an upgraded version can be released.
Non-disclosure Agreement
A Non-disclosure agreement is a legal contract between two or more parties that has information that will stay confidential for a certain period.
Pivot
Pivot in commerce language would mean changing directions as a company and is usually used to describe going after a different market segment or using an established technology for an entirely new purpose.
Run Rate
The run rate is a projection of a business's future performance based on its current revenue data through mathematical calculations.
Runway
Time until a startup exhausts financial resources based on the current burn rate.
ROI
A term used by many startup founders is ROI, ROI stands for Return on Investment. It can be described as the performance measure used to evaluate the efficiency of an investment or compare the efficiency of several different investments. ROI is a financial metric of profitability that is used to measure the return or gain from an investment made by an investor or businessman.
Scalability
A startup's ability to handle growth efficiently without proportionally increasing resources.
Scale Up
Process of expanding a startup's operations, customer base, and revenue.
Seed Round
The initial stage of fundraising is where a startup seeks investment from external means to support the product's research and development, market research, and operations.
Kinnary Nensee
Serial Entrepreneur
A serial entrepreneur is a word that is used for people who take up different creative ideas and convert them into business strategies that are ought to be successful.
Series A, B, C, etc.
Funding stages with increasing capital for startup expansion.
Solopreneur
An individual who runs and operates a business on their own, fulfilling both roles as an entrepreneur and sole employee. They are self-reliant individuals.
Sweat Equity
These are the shares of a company given in exchange for work done by its employees. Sweat Equity is a good recruiting technique that helps a company attract passionate talent that can be paid in non-monetary investments that the owners or employees contribute to a business venture.
Parnas Ghosh
Startups
These are emerging enterprises that are small in scale, demonstrate rapid growth, possess agility, and are frequently distinguished by their innovative approaches.
Term Sheet
A Term Sheet is a document that outlines what an investor has agreed to on the terms and conditions under which the investment will be made. It serves as a template that can be used to develop more detailed legally binding documents.
Traction
The term means proof that people are buying and using your product or services. You can calculate traction by using metrics like daily signups, monthly visits, and active users.
Unicorn
In the business world, it refers to a startup company that is valued at over $1 billion. The term is used to highlight the high growth, high valuation, and market potential of such firms, similar to the mythical creature, the unicorn, which is known for being rare and magical.
Valuation
Planning to approach investors, make sure you know this startup term. Valuation means what your company is being valued at. Pre-money valuation is the value before your startup takes investors’ money and Post-money valuation is that amount plus the investment put in.
Value Proposition
The term describes what is the most unique or attractive feature of your product or service. It is a statement that describes why customers should choose or buy your product or service.
Venture Capital (VC)
You might have come across this startup term when raising funds. VC stands for Venture Capitalist and it is a person that provides capital to firms exhibiting high growth potential in exchange for an equity stake. The objective could be to fund startup ventures or support small companies that wish to expand but do not have access to the equities market at present.
Vesting
The process by which an employee earns the right to own or 'vest' in shares or stock options over time. It is often used as a strategy to incentivize employees to stay with the company for a certain period, encouraging loyalty and aligning their interests with the long-term success of the startup.
Conclusion
Whether you are planning to launch your startup or you already have an established startup business you need to know all the startup funding terms and keep yourself updated. These are some of the commonly used startup terms to know. We will try our best to keep this list of startup jargon words updated.
FAQs
What are some of the business terms to know?
Assets, Liabilities, Expenses, Net Profit, Net Loss, ROI, and Cash flow are some of the common business terms.
What are some of the common startup-related words?
Accelerator, Churn Rate, Launch, Intellectual property, Growth hacking, Exit strategy, and Pitch deck are some of the common startup-related words.
What are some financial terms for startups?
Acqui-hired, Angel investor, Burn rate, Convertible note, and Valuation are some of the financial terms you need to know before you get funding.
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