Every entrepreneur must be able to speak fluently and naturally in the language of the startup world in order to run a successful firm. An important part of starting your own firm is learning the jargon used in the industry and in this instance, startup terminology.
Tech-savvy or not, the most successful business owners are able to communicate effectively with a wide range of people, whether they be in the finance department, the programming team, designers, or any other part of the company.
Investors (Venture Capitalists) want to know what your company does, therefore you’ll have to explain that. For a good reason, the startup jargon you’ll need to grasp is also known as “startup slang.” To make your business plan stand out, it’s a good idea to get familiar with the lingo used in the industry. Words like this are sometimes known as jargon.
Every prospective business owner should be familiar with the startup terminology listed below. Dictionary definitions define jargon as “unique terms or idioms used by professionals or groups that are difficult to grasp by others.”
Before we get into the startup jargon, let’s see what those phrases mean. Exactly what is a “startup”?
What is a startup?
One or more entrepreneurs form a startup with the goal of bringing a new product or service to market. A startup, or start-up, is a business founded by an entrepreneur in order to discover, create, and prove a scalable economic model. While everyone’s opinion is different, Wikipedia’s definition is the most widely accepted.
If you’re looking for investment, you’ll need to grasp the terminology of the startup world.
It is a short-term programme that provides guidance, tools, and potentially financial options to help a firm develop fast.
When a small firm is bought for its personnel, the phrase “acqui-hired” is used. If a bigger firm buys a smaller one, it may decide to abandon the product in favour of poaching the smaller company’s best staff.
It is the role of an angel investor to provide a business with its initial financial backing. Those behind the startup‘s concept or solution are supported financially by this individual.
Self-funding a startup is known as bootstrapping. Entrepreneurs who are starting a new firm often utilise their personal funds and money from family and friends to get it off the ground. Around 80% of new businesses are founded solely with the money they have saved up over the course of many months or even years.
When a firm needs money in the interim between investment rounds, it may use a bridge loan, which typically lasts two to three years.
Burn rate is the most important factor in determining whether or not an investor will give you money, since it gauges how quickly you spend money in comparison to the amount of money that you have.
Employees must wait a certain amount of time before they may collect a portion of their shares. In order to keep personnel, especially CEOs, on board during the early phases, the cliff is normally one year in length.
In a co-working facility, workers from various firms work together in the same place. When compared to renting or purchasing a whole office space for a small number of workers, this strategy works especially well for startups.
When starting a cottage company, it’s ideal to keep things simple and modest. As a result of this, the phrase “home-based company” was coined to describe companies that would be better served by operating from a residence than from a traditional office.
Some firms have found success raising money from people who have an immediate and direct interest in the company’s product or service instead of going to more conventional sources of funding. Several firms are giving reduced pre-orders of their goods or services at a lesser price in order to collect money via crowdfunding.
Any firm that has raised $1 billion in capital from investors (Venture capitalists) is considered a dragon. As a dragon startup, Uber is a good illustration.
Influential customers who utilise your product or service before the rest of the public do are known as “early adopters.” It’s possible that these users may provide you useful feedback before the product or service is sent out to a larger audience.
Exit strategies, which outline how a business will be sold through a merger, acquisition, or initial public offering (IPO), are common among entrepreneurs. As an entrepreneur, you should do this for the benefit of your investors (VCs).
For entrepreneurs, a freemium model is a common option. Offering a limited version of an item or service for free, but with more features offered at a higher price.
Although Canva, a popular design site, allows free registration, you will not be able to access premium stock pictures and more storage or certain template designs without paying for a Pro membership.
IPO (initial public offering) is the process through which a company’s equity is made available to the general public. Those who purchase stock in a corporation will become partial owners of that business, which is still another way to invest.
“Startup” is a phrase for a strategy that uses low-cost strategies to rapidly build a business. As a result, a growing number of businesses are turning to social media for growth hacking, trying to gain traction for their goods or services without spending a lot of money on advertising.
Investors (Venture Capitalists) want to see a startup’s growth curve look like a hockey stick, with indicators like revenue or active users possibly doubling every year.
Incubators provide firms with tools and coaching to help them through the early stages of their growth. An accelerator often provides businesses with these tools and contacts in return for stock, but this is a long-term programme.
The launch of a startup occurs when the company’s product or service is eventually made available to the public. If a soft launch or beta items and services are included, entrepreneurs may evaluate interest in their firms from prospective customers via a test launch with minimum public exposure.
By producing and testing goods as rapidly and cheaply as possible, a “lean” company aims to enhance the product via trial and error rather than building a fully finished product that may not attract consumers.
In the startup world, MVP stands for minimum viable product, which means that a firm’s product should have a limited number of features and selling points that can be shown without spending a lot to develop a full-fledged product before it gets financing.
If you want to attract investors (Venture Capitalists), you need a great pitch deck – a presentation on essential features of your firm, including your product, target market, and business strategy.
The aim is for the presentation to be quick, informative, and attractive to convince investors you have a solid, sustainable concept that will provide them a high return on their investments.
A pivot happens when a startup makes a swift, significant modification to its business strategy. This might be in the product or service or even the intended audience. A minor modification is termed an iteration.
This startup concept refers to the sustainability and possible expansion of a firm. Every company aims to build a repeatable, profitable business model that can be applied to a larger and larger number of customers.
Agile project management approach known as “Scrum” was initially developed to assist development teams make choices, but it may be used to other elements of an organisation.
There are three entities in the scrum framework: the product owner, the product master, and the scrum team.
• Product owner: A single individual with excellent understanding of the consumer who maintains and prioritises goods.
• Scrum master: The scrum master helps eliminate impediments to enable the whole scrum team finish their task.
Development team members work together and make decisions on how they will do their tasks, as well as what tools or approaches the firm will use.
Early-stage investors are sought by entrepreneurs in the “seed round” of venture capital fundraising. After recruiting angel investors, a “series” of funding rounds follow (Series A, Series B, Series C, and so on).
One of the most common goals of an entrepreneur is to establish a new company and develop it. When it comes to starting a company, a solopreneur is the only person involved. This model is growing more widespread as the number of freelancers, such as writers, designers, and developers, rises.
Human capital is just sweat equity. Many new businesses do not have the resources to pay for the salaries and benefits of their employees. Even if the company does not get finance, entrepreneurial workers who put in the time may still be rewarded with stock options.
A unicorn startup is a $1 billion-plus enterprise. Dragons, firms that receive $1 billion in a single round of investment, are unusual, but not as rare as these enterprises.
Pre- and post-money valuations are used to assess the value of a firm, but the two are distinct.
An assessment of the value of your business before you obtain any finance is known as a “pre-money valuation.” Investors (Venture Capitalists) might use it to see whether your firm is worth their money.
Once your firm has received a round of investment, the pre-money value and post-money valuation are added together.