For those who’re exploring a profession within the startup world, brace yourselves for startup jargon. Entrepreneurship is a broad idea with plenty of elements to outline — and when you throw in issues like MVP, IPO, and ARR, it could actually really feel complicated shortly.
I’ve now labored with a number of startups in my profession and know what an enormous studying curve it could actually really feel like to start with. Typically, it even feels as if persons are talking one other language.
That’s as a result of for each stage of the startup journey — from discovering buyers to launching your organization to taking the enterprise public — there are a whole bunch of startup-specific phrases to account for. Though I’ve needed to choose up this experience over time, I’m right here to assist break down the important thing phrases you must know and simplify ideas and phrases you’re prone to encounter.
For those who’re hoping to tackle the startup world or brush up in your startup information, I’ve created this information to the important thing startup phrases each aspiring entrepreneur ought to know.
Desk of Contents
The Final Record of Startup Phrases
- Accelerator
- Acqui-hired
- Angel Investor
- Bootstrapping
- Bridge Mortgage
- Burn Charge
- Cliff
- Co-Working Area
- Cottage Enterprise
- Crowdfunding
- Dragon
- Early Adopters
- Exit Technique
- Freemium
- Go Public/IPO
- Development Hacking
- Hockey Stick
- Incubator
- Launch
- Lean
- MVP
- Pitch Deck
- Pivot
- Scalability
- Scrum
- Seed Spherical
- Solopreneur
- Sweat Fairness
- Unicorn
- Valuation
Each well-established firm needed to begin someplace, and probably the most profitable companies based lately match the “typical start-up” invoice in some unspecified time in the future.
Virtually all of them needed to cope with not less than a number of the startup lingo listed under. So when you’re seeking to put your huge thought in movement — no matter your small business mannequin or business — it serves you to have a grip on the phrases on this listing.
1. Accelerator
An accelerator is a company that gives a short-term program with mentorship, assets, and even funding alternatives to assist a enterprise develop shortly. An instance is HubSpot Creators, an accelerator for enterprise media creators.
In my expertise working with startups, accelerators have been invaluable. A consumer of mine went by way of Y Combinator and got here out with an improved enterprise mannequin and business connections.
Instance: “In trade for his or her companies, startup accelerator packages both earn money or acquire fairness in a brand new firm they’re supporting.”
2. Acqui-hired
This startup time period implies that a small (and sure failing) enterprise is bought for its workforce. A bigger firm may purchase out one other firm and get rid of the product — merely shopping for the group to poach its proficient workers.
Instance: “When the tech large acqui-hired the small AI startup, they shut down the startup’s product however built-in its proficient engineers into their very own workforce.”
3. Angel Investor
An angel investor is somebody who provides the primary funding to a startup. This particular person believes within the startup’s thought or resolution and offers the entrepreneurs behind it with the cash to get began.
Instance: “The angel investor offered $100,000 in seed funding to the startup in trade for a ten% fairness stake within the firm.”
4. Bootstrapping
When a startup is bootstrapping, it is self-funded. Particularly for model new startups, entrepreneurs will use their very own financial savings in addition to cash from family and friends to get the enterprise began. Greater than 80% of startups begin out by way of bootstrapping.
Instance: “The founders had been bootstrapping their startup, utilizing their private financial savings and maxing out bank cards to fund the preliminary product growth.”
5. Bridge Mortgage
A bridge mortgage is a short-term mortgage — often overlaying two weeks to a few years — that helps a startup entry cash in between rounds of funding.
Instance: “The startup secured a $500,000 bridge mortgage to cowl working bills whereas they closed their Sequence A funding spherical.”
6. Burn Charge
Most buyers will wish to know your burn charge — how shortly you might be spending cash in comparison with your capital throughout a decided period of time — earlier than doling out funding.
Instance: “With a month-to-month burn charge of $50,000, the startup had sufficient runway to function for one more 18 months earlier than needing extra funding.”
7. Cliff
The cliff for vesting is a time frame required earlier than workers can declare percentages of their shares. The cliff is often one yr, and it is meant to maintain workers — notably CEOs — round by way of the early levels reasonably than taking the advantages and leaving.
Instance: “The startup’s inventory possibility plan included a one-year cliff, which means workers needed to keep for not less than a yr earlier than any of their choices vested.”
8. Co-Working Area
A co-working area is an workplace that’s shared by workers from completely different corporations. This mannequin works notably nicely for startups as a result of they will pay a smaller price to make use of the shared services in comparison with renting or shopping for a full workplace area for a small variety of workers.
I work in a co-working area every now and then and love the publicity and networking alternatives I get with it.
Instance: “The early-stage startup rented desks in a co-working area, permitting them to have an expert work atmosphere with out the excessive prices of a non-public workplace.”
9. Cottage Enterprise
Cottage companies are startups that work finest if they continue to be at a small scale. The time period stems from the notion that these sorts of companies would work nicely in the event that they operated inside a house reasonably than a traditional workplace area.
Instance: “The handmade cleaning soap firm began as a cottage enterprise, with manufacturing happening within the founder’s kitchen.”
10. Crowdfunding
Crowdfunding is an alternate, accessible, extra democratic type of funding the place an organization sources capital from a variety of buyers and purchasers who put up cash for a enterprise — purely due to their fast, particular person curiosity in its providing. Many startups will supply pre-orders of their services or products at discounted charges to boost cash by way of crowdfunding.
Kickstarter, for instance, is a crowdfunding platform.
Instance: “The {hardware} startup raised $1 million by way of crowdfunding by pre-selling their modern sensible residence machine to early adopters.”
11. Dragon
A dragon is a uncommon startup that raises $1 billion in a single spherical of funding. Uber is an instance of a dragon startup.
Instance: “The ride-sharing app grew to become a dragon when it raised $1.2 billion in a single funding spherical, setting a brand new report within the startup world.”
12. Early Adopters
An early adopter is an influential consumer who makes use of your services or products lengthy earlier than most people does. Usually, these customers can give you insightful and trustworthy suggestions that can assist you enhance the services or products earlier than taking it to the bigger target market.
I’ve seen the facility of early adopters in motion. Actually, I used to be an early adopter of Jasper.ai again when it was Conversion.ai and adopted the expansion of AI writing instruments very intently.
Instance: “The startup’s early adopters offered essential suggestions on the beta model of the app, serving to to refine options earlier than the general public launch.”
13. Exit Technique
Entrepreneurs usually arrange an exit technique, which is how they plan to promote their firm by way of mergers, acquisitions, or IPOs. Doing so will enable the founder to switch possession and become profitable to pay again buyers.
Instance: “The founders’ exit technique concerned rising the corporate to $100 million in annual income after which looking for acquisition by a bigger tech agency.”
14. Freemium
A freemium mannequin is a well-liked selection for startups. It refers to providing clients a restricted model of a services or products without cost with extra superior choices out there at further value.
For instance, you may have the opportunity to join Canva — a well-liked design platform — without cost, however you’ll be able to’t entry premium inventory images, extra storage, or some templates until you pay for a Professional subscription.
Right here’s what their pricing web page seems like:
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Instance: “The challenge administration software program used a freemium mannequin, providing fundamental options without cost and charging for superior performance.”
15. Go Public/IPO
Going public is when an organization places its inventory on the general public market by way of an IPO (preliminary public providing) for broader, public funding. That is one other type of investing, however those that purchase the shares will personal parts of the corporate.
Instance: “The ecommerce startup determined to go public, launching an IPO that valued the corporate at $10 billion.”
16. Development Hacking
This can be a advertising startup time period that refers to a targeted technique utilizing low-cost strategies to shortly develop an organization. Many corporations today flip to social media for progress hacking — hoping to go viral with their services or products with out burning an excessive amount of capital on advertising.
Instance: “The social media app used progress hacking methods, resembling incentivized consumer invitations, to quickly develop its consumer base with out a big advertising finances.”
17. Hockey Stick
Buyers need a startup’s progress curve to appear like a hockey stick, doubtlessly doubling metrics like gross sales or variety of energetic customers annually.
Instance: “The biotech startup joined a university-affiliated incubator, having access to lab area and mentorship from skilled scientists.”
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18. Incubator
An incubator affords companies assets and mentorship to get by way of a number of the preliminary rising pains of startup life. This can be a long-term program, not like an accelerator, sometimes providing startups these assets and connections in trade for fairness.
I’ve written case research for startups which have gone by way of incubators. One AI startup I labored with credited their time in a outstanding tech incubator for refining their enterprise mannequin and securing their first main consumer.
Instance: “The biotech startup joined a university-affiliated incubator, having access to lab area and mentorship from skilled scientists.”
19. Launch
A startup’s launch is when it lastly brings its services or products to market. This may additionally embody a comfortable launch, which is extra of a take a look at launch with minimal press publicity and beta services and products to assist entrepreneurs gauge curiosity of their corporations from potential purchasers.
I‘ve been a part of a number of product launches, and so they’re all the time thrilling. One consumer’s app launch occasion I attended became an impromptu celebration once they hit it huge on Product Hunt.
Instance: “The startup’s product launch occasion attracted media consideration and resulted in a surge of latest consumer sign-ups.”
20. Lean
The objective of a “lean” startup is to construct and take a look at merchandise as shortly and inexpensively as potential to enhance the product by way of trial and error reasonably than constructing out a totally developed product that may not entice patrons.
Instance: “Following lean startup ideas, the workforce developed a minimal viable product and iterated primarily based on consumer suggestions.”
21. MVP
MVP for startups stands for minimal viable product — a bare-bones mannequin of a startup’s product that can present its key options and promoting factors with out costing a fortune to make a full-fledged product earlier than it has funding.
Instance: “The startup’s MVP was a easy touchdown web page that gauged curiosity of their proposed service earlier than they constructed any precise performance.”
22. Pitch Deck
If you wish to entice buyers, you want a powerful pitch deck — a presentation on key features of your small business, together with your product, goal market, and marketing strategy.
The objective is for the presentation to be quick, informative, and engaging to indicate buyers you’ve gotten an incredible, sustainable thought that can give them an incredible return on their investments.
Instance: “The founder’s pitch deck included 12 slides overlaying the issue, resolution, market dimension, and monetary projections.”
23. Pivot
A pivot happens when a startup makes a fast, radical shift to its enterprise mannequin. This may very well be within the services or products and even the target market. A smaller change is named an iteration.
A startup I collaborated with often fully pivoted its mannequin from a freelancing platform to a studying platform for freelancers.
Instance: “When their preliminary B2C technique failed to achieve traction, the startup executed a pivot to give attention to B2B clients as an alternative.”
24. Scalability
This startup time period refers back to the sustainability and potential progress of a enterprise. The objective of most companies is to develop and supply items or companies to an growing quantity of customers by way of a repeatable, viable enterprise mannequin.
I’ve written about scalability challenges for a lot of startups. One e-commerce consumer I labored with needed to fully overhaul their infrastructure after a viral advertising marketing campaign crashed their website.
Instance: “The startup’s cloud-based structure ensured scalability, permitting them to deal with a 10x improve in customers with out important infrastructure adjustments.”
25. Scrum
“Scrum” refers to an agile challenge administration technique that was initially designed for making selections inside growth groups — however it may be utilized to different areas of a enterprise.
The scrum framework focuses on training, creativity, and collaboration amongst three entities: the product proprietor, the scrum grasp, and the scrum workforce.
- Product proprietor: A single particular person with intensive information of the consumer who manages and prioritizes merchandise.
- Scrum grasp: The scrum grasp helps take away roadblocks to assist the whole scrum workforce full their work.
- Builders: As the primary element of the scrum workforce, builders collaborate and resolve on how one can get their work completed and what instruments and methods the startup ought to use.
Instance: “The event workforce used scrum methodology, with day by day stand-ups and two-week dash cycles to handle their workflow.”
26. Seed Spherical
The seed spherical refers back to the very first stage of enterprise capital funding, the place a enterprise proprietor finds early-stage buyers. This funding spherical comes after discovering angel buyers and is adopted by rounds of funding named by “collection” (Sequence A, Sequence B, Sequence C, and so forth).
Instance: “The startup raised a $2 million seed spherical from a mixture of angel buyers and early-stage enterprise capital companies.”
27. Solopreneur
An entrepreneur sometimes has plans to begin and develop a enterprise. A solopreneur, alternatively, begins and doubtlessly even grows a enterprise alone. This mannequin is changing into extra prevalent with the rise of freelance writers, designers, and builders.
I’m a solopreneur myself and am slowly getting snug with the concept of outsourcing some duties, so I’ve extra time to myself.
Instance: “As a solopreneur, she single-handedly developed the app, dealt with advertising, and managed buyer assist.”
28. Sweat Fairness
Sweat fairness is basically human capital. Once you’re simply beginning out, you won’t even have sufficient funding but to pay for worker companies. Workers who danger placing within the work for a startup can nonetheless obtain fairness — one thing that would repay huge time ought to the corporate obtain funding.
Instance: “The startup’s first workers acquired sweat fairness in lieu of excessive salaries, betting on the corporate’s future success.”
29. Unicorn
A unicorn startup is an organization that’s valued at $1 billion. Whereas these companies are uncommon, they don’t seem to be fairly as scarce as dragons, startups that elevate $1 billion in a single spherical of funding.
Instance: “The fintech startup achieved unicorn standing after a funding spherical that valued the corporate at $1.2 billion.”
30. Valuation
Valuation refers to how a lot your organization is value, however that is decided in two methods: pre- and post-money valuation.
- Pre-money valuation: That is an estimate of how beneficial your organization is earlier than you obtain any funding. It might probably assist buyers decide if your organization is value investing in.
- Publish-money valuation: That is how a lot your organization is value after a spherical of funding plus the pre-money valuation.
Instance: “The startup’s pre-money valuation was $5 million, however after elevating $1 million in funding, its post-money valuation elevated to $6 million.”
31. Churn Charge
Churn charge is the share of shoppers who cease utilizing a services or products. It is calculated by dividing the variety of clients misplaced throughout a interval by the full quantity at the beginning. You need a low churn charge since this implies you’re retaining clients.
Instance: “A SaaS startup may need a month-to-month churn charge of 5%, which means they lose 5% of their current clients every month.”
32. Product-Market Match
Product-market match is achieved when a services or products efficiently meets the calls for of its goal market. It implies that clients not solely purchase the product but additionally actively use and suggest it to others.
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My expertise with product-market match has taught me that it isn’t all the time straightforward to realize. I as soon as collaborated with a startup that pivoted 3 times earlier than lastly discovering its area of interest. Once they did, although, their progress exploded.
Instance: “The social media app achieved product-market match when it noticed exponential consumer progress and excessive engagement charges inside its goal demographic.”
33. Buyer Acquisition Price (CAC)
CAC is the full value of buying a brand new buyer, together with advertising and gross sales bills.
I’ve seen firsthand how crucial understanding CAC is for startups. Certainly one of my purchasers was spending means an excessive amount of on paid promoting, leading to a CAC that was unsustainable. We labored collectively to optimize their content material advertising technique, which finally introduced their CAC down by 40%.
Instance: “The e-commerce startup diminished its CAC from $50 to $30 by optimizing its Fb advert campaigns and enhancing its web site conversion charge.”
34. Lifetime Worth (LTV)
LTV represents the full income a enterprise can anticipate from a single buyer account all through their relationship.
Instance: “By enhancing buyer retention and introducing premium options, the SaaS firm elevated its common LTV from $500 to $750 per buyer.”
35. Traction
Traction in startups is the tangible proof of progress and progress, demonstrating {that a} services or products is gaining market acceptance. You possibly can measure it by way of metrics like consumer engagement, income progress, or buyer acquisition. Buyers use traction to validate a startup’s potential for fulfillment and entice extra funding.
Instance: “The meals supply app demonstrated robust traction by rising its consumer base from 10,000 to 100,000 in simply three months.”
36. Runway
Runway refers back to the period of time a startup has earlier than it runs out of cash, primarily based on its present burn charge and money available.
Instance: “With $500,000 within the financial institution and a month-to-month burn charge of $50,000, the startup had a runway of 10 months to both change into worthwhile or safe extra funding.”
Be taught Startup Phrases to Carry Your Concepts to Life
Now that you understand a number of the most regularly used startup phrases, you’ll be able to really feel slightly extra ready to begin down the trail of entrepreneurship. It’s all the time going to be scary to take the leap, however understanding the lingo may give you some confidence as you begin bootstrapping and looking for angel buyers.