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 investor. You need to speak their language to, it is also called startup lingo. It is wise to know the vocabulary which is common in the circuit to showcase your business plan effectively. These words are also called jargon words.
Following is the list of jargon words often known as startup jargon which every aspiring entrepreneur should know about. According to dictionary, jargon words mean special words or expressions used by a profession or group that are difficult for others to understand.
In this article, we've shared some commonly used startup terms which you may not have heard yet or if you already know these terms then also you can learn more about the startup terms to enhance your knowledge about startup and entrepreneurship. Before diving into these terms let's first find out what a startup actually is?
What is Startup?
Startup is any company which is at its infant stage and founded by one or two entrepreneur for the purpose of launching a unique product or service. Well everyone having different perspective suggests variety of definitions, but the popular one given by wikipedia is as - "A startup or start-up is a company or project begun by an entrepreneur to seek, develop, and validate a scalable economic model."
So, now let's move to the business terms every entrepreneur should know.
30 Startup Terms Every Entrepreneur Should Know
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 to your app/website.
It is a strategy used to acquire talent when one company buys out another company primarily for the skills and expertise of the staff.
Also called an Incubator, is a center where start-ups are “incubated” through mentorship, space and sometimes money.
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.
Bootstrapping is the use of money that is taken from friends and family, existing resources or personal savings as the initial investment to startup a business.
6. Burn Rate
Also called as 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 start-up to lose sums of money for several years before breaking or making a profit.
7. 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 span of time. The growth rate must exceed its churn rate.
Cliffs are a way for an Executive to fire employees or let them leave without giving them stock within limited period of time. Cliffs are also used by the investors on CEOs to make sure the CEO sticks around after getting the cash.
Also called ‘Pitch Deck’, it is a short and limited slide of PPT that covers all the aspects of your aspects. It is usually contains ten slides. The deck should be compact, concise and create a maximum impact. One should consider to gain a lot of feedback and hiring a graphic designer to make the final version look spectacular.
10. Disruptive Technology
A discovery of such technology that completely changes the way society does something. Example, Uber and Ola changed the way Taxis used to operate. Amazon or FlipCart being a virtual store that did not existed about two decades ago, there were physical in-store shopping.
11. 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 has been met or exceeded. It is basically 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 is 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 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. Example, a digital offering or an app such as Netflix which charges a premium before you can avail a free trial.
14. Growth Hacking
Growth Hacking is a term that was coined by Sean Ellis and it basically describes a marketing technique that focuses on quickly finding scalable growth through non-traditional and inexpensive tactics such as the use of 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.
15. 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 images used in commerce.
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.
Launch means to introduce and start something new, for instance a company, a website or a product.
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 an investment. In accounting term, leverage also means the amount of debt a firm uses to finance assets.
19. 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 repeat future purchases from.
20. Market Penetration
Market Penetration is a measure of the amount of sales, adoption and presence of a product or service compared to the total theoretical market for that product or service. The term also means to include the activities that are used to increase the market share of a product or service.
The term means something is converted from a non-revenue generating asset into a source of revenue. In economics, monetizing means to convert any object or transaction into a form of currency or something that has transferable value.
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 basically a bare-bones version of a product required to achieve proof of concept and is often used in creation of new software that will be Beta tested, so that later an upgraded version can be released.
Pivot in commerce language would mean changing directions as a company and is usually used to describe as going after a different market segment or using an established technology for an entirely new purpose.
ROI stands for Return on Investment. It can described as the performance measure used to evaluate the efficiency of an investment or comparing the efficiency of a number of 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 businessmen.
25. 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.
26. Term Sheet
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.
The term means a proof that people are actually buying and using your product or services.
Valuation means what your company is being valued at. Pre-money valuation is the value before your startup take investors’ money and Post-money valuation is that amount plus the investment put in.
29. Value Prop
The term describes what is the most unique or attractive feature of your product or service.
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 supporting small companies that wish to expand but do not have access to equities market at present.
Whether you are planning to launch your startup or you already have an established startup business you need to know all the startup terms and keep yourself updated. These are some of the commonly used startup terms. We will try our best to keep this list of jargon words updated. If you want to suggest anything let us know in the comment below.