With a rapid increase in startups across the globe, a whole new vocabulary has emerged. Any entrepreneur or a rookie in the startup world should be aware of the startup jargon used now and then. As an entrepreneur pitching to investors, you have to show them that you understand the industry and trends. Being aware of the startup lingo will help you to intrigue the investors by speaking their language.
While there are endless abbreviations and expressions, here are 20 most commonly used words:
While it doesn’t literally mean the car accelerator, it does give a boost to your startup journey. In an accelerator, startups are given mentorship, space to work on their ideas and sometimes seed capital. The words Accelerator and Incubator are sometimes used interchangeably.
2. Angel Investors
An angel investor (private investor, seed investor or angel funder) is a high-net-worth individual who provides finance to small startups or entrepreneurs, in exchange for ownership equity in the company. If you have watched the show Shark Tank, you would know!
There is a phrase – ‘Pulling oneself up by one’s bootstraps.’ That is quite what bootstrapping is. It means that a startup is using personal cash or cash from friends and family to run its operations. The Three Fs”: Friends, Family and Fools, are usually the channels from where you get your first cash to start your venture.
4. Burn Rate
Burn rate means how fast you go through your cash. It is typically used to describe the rate at which a new company is spending its venture capital to finance overhead expenses before generating positive cash flow from operations.
Crowdfunding is simply raising money from the public, usually through online forums, social media or crowdfunding websites in order to finance a new project or venture. It is like an act of using a site to get a bunch of early fans together to give you money to launch your product. In equity crowdfunding, you keep 100% of your company and only give away a small tiny slice of equity to the crowdfunding portal.
6. Deck (Pitch Deck)
A Deck is a short 10 slide PowerPoint presentation that covers all aspects of your startup. The pitch deck should be compact and concise and be able to create a maximum impact. It must cover all aspects of your business in a succinct and interesting matter that could grab eyeballs while pitching.
If you are thinking that an Evangelist is a person who seeks to convert others to the Christian faith by public preaching, you are right. But when it comes to Startups, the meaning of Evangelist is completely different. The purpose of an evangelist is to help a company, a product or technology go from zero to hero. The evangelist would love your company so much that they often go above and beyond their expected role to help promote your company.
8. Exit strategy
An exit strategy is planning to sell your company to give you and your investors a return on their investment. It is a contingency plan executed by an investor, trader, venture capitalist or business owner to liquidate a position in a financial asset or dispose of tangible business assets.
‘Freemium’ is a combination of “free” and “premium”. It means to have created a model in which your basic product is free and your final goal is to upsell features to your consumers once there is enough traction. The users get basic features at no cost but can access richer functionality for a subscription fee. This is very commonly seen in OTT platforms, music apps etc.
10. Growth Hacking
Growth hacking describes marketing strategies focused solely on growth. It is usually used for early-stage startups who need massive growth in a short time on small budgets. It focuses on quickly finding scalable growth through non-traditional and cost-effective tactics such as the use of social media. The term was first used by Sean Ellis, founder and CEO of GrowthHackers, in 2010.
11. Hockey Stick
Hockey stick or Hockey Stick Growth is a word used by investors to describe the shape of the growth curve that they want to see in businesses. A hockey stick has a flat or somewhat-angled blade, which is connected to a long, vertical shaft. The “stick” depicts flat or subdued growth. The ‘shaft’ represents a period of exponential growth. When flat growth turns to exponential growth, it is called an inflection point.
12. IPO (Initial Public Offering)
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. At this point, a private organization turns into a public company.
This is the most nerve-wracking and euphoric moment. A Launch is when you start your company, website or app. Companies can either have a ‘soft launch’, which means minimal press exposure and staying in beta or throw a huge launch party.
14. Lean Startup
A lean startup is a startup that has been launched with as little startup capital as possible while getting data and feedback that can be used to improve the product. It is more or less similar to Growth Hacking in the sense that it’s about understanding what is working best for your consumers cheaply and effectively via constant feedback.
15. Loss Leader
A loss leader pricing strategy refers to an aggressive pricing strategy in which a startup prices its goods or services below cost to stimulate sales of other, profitable goods. It is done at a loss to lure customer traffic away from competitors. It is different from predatory pricing in the sense that loss leader pricing is aimed toward stimulating other sales of more profitable goods.
A Pivot is basically a change in direction as a company. A decision to pivot can either make or break a startup. In general words, pivoting means using the established company for an entirely new purpose. While considering pivot, businesses look to find a fresh perspective and vision to prevent themselves from growing stagnant. A well-known pivot is when Fab went from being a gay social network to being an e-commerce curator.
A scalable startup is one that takes an innovative idea, looks for a scalable and repeatable business model to turn it into a high growth, profitable company. Investors often ask the question, “How scalable is this opportunity?” While answering this question, the entrepreneur will have to think about, how big can the business grow, how much market demand is there, who is the target market etc.
18. Sweat Equity
Sweat equity is giving the shares of your company to early employees or contractors instead of cash. This is very common in the startup world before funding arrives. Sweat equity literally implies Hard Work Equity, i.e., startups give an equity percentage to a person for their hard work in the company. It is a great recruiting tool to attract passionate employees.
19. Term Sheet
The Term Sheet is one of the most important documents of a startup. It is basically a document that tells what percentage of ownership and voting rights will the Investors get for putting funds in your business. After an agreement is reached between the stakeholders involved, a binding agreement based on the term sheet is drawn up.
A unicorn is a term used to describe a privately held startup company with a value of over US$ 1 billion. The term was first popularized by venture capitalist Aileen Lee, founder of CowboyVC, a seed-stage venture capital fund. Some well-known unicorn startup companies include Tesla, AirBnB, Instagram and Shopify.
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