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25 Startup Terms you’ll probably hear and need to understand
by Startacus Admin
One of the most intimidating things any startup will have to deal with is the abhorrent amount of non-sense jargon that is thrown about by the community of investors, clients and support websites.
Without that business background, how are you supposed to know the difference between an angel investor and an invisible partner?
Here at Startacus, we say enough is enough, and we're on a mission to help you navigate the mumbled word ramblings of the on and offline business world, by giving you a handy list of buzz words and terms, and defining them (we hope all correctly!) so you don’t have to go looking for definitions every time you read anything about startups...
Here we go:
Angel Investor: An individual who will invest certain amounts of money to a startup, usually in its earliest stages, to promote development and growth of the product or service. They usually offer a small amount in return for a small amount of stake in the business.
Seed Investment: A term for another form of early stage investment. This is money invested at the beginning of a startup's lifecycle, instead of being used to develop the product, it is usually then aimed to develop the business i.e. staff, marketing, websites etc. This usually comes after Angel investment and can also come under the money for equity in the business.
Equity: Simply the shares/ownership of the business. Usually counted in percentages rather than set numbers of shares. This is how investors can measure their level of ownership and control of the business. It can also be used to raise money (capital) by selling certain amounts of shares. This is called ‘equity financing’.
Capital: Money, pretty much says it all. Generally the money invested in your business or money in the care of your business for other measures, i.e. growth, expansion and development.
Bootstrapping: Despite sounding like something a pirate would do, Bootstrapping simply means starting and funding a business from your own funds without any external influence, financially at least.
Incubator: An organization that offers services for equity to younger companies. Services can include but aren’t limited to office space, mentoring and help with business development and growth strategies. Like all things business however, they usually come with a price tag that reads equity or a certain amount of capital.
Accelerator: Often used interchangeably with ‘Incubator’, it’s a temporary program to boost the growth of a company offering, mentorship, services and even investment. Again, in return for equity.
Venture Capitalist: A specialist investor, usually working for another company or firm, who will invest in specialised companies that meet certain criteria. Usually an investment expert in a company's respective field.
Run-Rate: Basically the educated guess as to how the company's financial performance will look if the current results last over a period of time (positively or negatively) Basically, what a business's finances look like.
MVP (Minimum Viable Product): The most basic, simple, cheapest and easiest to produce product that a company could use to attract investment and customers.
Lean: In regards to a startup, it’s a model where a basic product is developed and adapted from user feedback, starting from a simple, ‘lean’ product and growing as the users would want. “Making the product, ‘Market Fit’”. This consists of making a basic product as quickly and cheaply as possible and going from there.
ROI (Return On Investment): What an investor would expect to make back, usually in capital, for their investment. If an ROI falls below a certain bracket, investors often reconsider offers or continuation.
SEO (Search Engine Optimization): This is an umbrella term for how easy it is to find your website online. For example, how far down the list would your company be in a ‘Google’ search for what your product is.
B2B (Business to Business): When a business isn’t aiming to make money from customers, but targeting a business instead. Offering new technology or platforms usually falls under this banner.
Hacking: Not quite the outdated term for stealing data, in business it means a clever or unorthodox way of solving a problem or dealing with a certain process.
Bridge Loan: Two dreaded words to a startup, it’s a loan, sometimes called a swing loan, that is intended to tide a business over between major points for financing.
IPO (Initial Public Offering): When shares in a company are originally offered for sale to the general public, meaning a business changes from a private venture to a public one and it graduates from being a startup. (You’ll still be welcome on Startacus though!)
Ninja/Wizard/Rockstar/Guru: A specialist in a certain field within the business, but they probably aren’t fussed on their actual job title. Like a marketing ‘ninja’ is more than likely just an experienced marketing executive. (As a side note, Everyone at Startacus is disappointed that we don’t get to work with REAL wizards).
Disruptive Technology / Disruption/ Disruptor: A flashy way of saying that a product or service will change the way customers use a service or product. Innovative or different, it usually refers to something new, that should change a playing field for associated businesses. For example, Online shopping was disruptive of in store shopping.
Low hanging fruit: Get your head out of the gutter! This means the easiest thing a startup can do to start raising their own money.
Pivot: This means to take the company in different direction, for example using your platform to perform a different function that its original intent. (Also a remarkably funny scene from 'Friends')
Ramen Profitable: A rather cruel way of saying that a venture can generate enough profit to sustain all of the workers to a minimal standard of living, i.e. living off of ramen noodles.
Traction: Proof that people are actually buying and using your product
Freemium: A portmanteau of the words “free” and “premium” meaning there’s a basic version of your service that is available for free, or for a fee there are other, better services available from your company.