Bootstrapped startups have an average growth rate of 20% per year.
Startup owners may seek the help of angel investors, venture capitalists, etc. in the first funding round.
61% of startups offer B2B solutions, while only 39% offer B2C solutions globally.
You might've heard these statements before. However, many of these terms, such as boostrapping, venture capitalists, initial public offerings, seed capital, Series A, B, and C, appear baffling. There are thousands of startup-specific terms that an entrepreneur must take into account.
These words are also called jargon words (the words used by professionals that are difficult for others to understand) in the startup terminology.
An entrepreneur should speak such a language or vocabulary for various business purposes. So, it's necessary to deal with these startup words because they are actually helpful in -
- Convenient Conversation
- Reading the company's statements and balance sheets
- Easily present your idea and prototype to your investors
- Understanding the market and competitors with ease
List of Frequently Used Startup Terms in the Business World.
- Accredited Investor
- Acqui-hiring
- Angel Investors
- B2B
- Boostrapping
- Bridge Loan
- Burn Rate
- Business Plan
- Churn Rate
- Crowd Funding
- Disruptive Technology
- Dragon
- ESOPs
- Freemium
- Hockey Stick
- Initial Public Offering (IPO)
- Iteration
- Market Penetration
- MVP
- Pitch Deck
- Pivot
- Pre - Seed Funding
- Retention
- Seed Fund
- Startup Accelerator
- Startup Incubator
- Sweat Equity
- Unicorn
- Valuation
- Value Proposition
- Venture Capitalist
- Vesting
1. Accredited Investor
Accredited investors are people who are allowed to invest in high-risk securities, venture capital, angel investments, funds, etc. These are individuals or institutions with a high net worth as determined by the Securities and Exchange Commission (SEC).
2. Acqui-hiring
Acqui-hiring (acquisition + hiring) is a startup term that represents a recruitment-based strategy in which one company buys another, especially to take control over its skilled employees. The primary goal is to acquire the talent of workers rather than the products and services of that company.
Aqui-hiring is commonly used in the tech industry as a shortcut to finding the best talent without wasting time searching.
3. Angel Investors
These are independent individuals who attempt to invest their capital in startups and early-stage businesses, helping them grow in exchange for a percentage ownership stake in the company, or equity.
4. Business-to-Business (B2B)
Exchange of goods and services between two companies or businesses in the form of a commercial transaction.
# Business-to-Consumer (B2C)
A business that offers its outputs directly to customers rather than other businesses is said to be business-to-consumer based.
5. Boostrapping
A common term in startup terminology is "boostrapping," which refers to a strategy of running and scaling the startup with personal finances. It's not strange to say that businesses with low to no startup costs choose bootstrapping, which allows them to grow without external help. Founders may attempt to reinvest the profits to scale their venture.
6. Bridge Loan
A short-term financing option to get through the discomfort between two investment cycles. It is a quick way to deal with obstacles or pay the cash requirements before the actual funding round is expected.
7. Burn rate
It is the measurement of how fast an unprofitable startup spends its money (initial capital reserves) over a month. A high burn rate prevents investors from coming into the game.
8. Business Plan
This is a written document that runs parallel to the business model. It details a business's core objectives and several means of achieving them. A business plan may consist of marketing and branding strategies, financial requirements and ways to fulfil them, special practises to deal with competition, an execution summary, evaluation methods, valuation estimations, etc.
9. Churn Rate
Churn rate is a startup term that refers to the rate at which existing customers discontinue the use of products or services from a startup over a given period of time. In simple words, how fast your business loses potential paying customers defines your churn rate. A high churn rate is a bad indicator for your business.
10. Crowdfunding
Crowdfunding is when a startup raises a significant amount of capital from a large number of individuals, investors, or institutions via online platforms. Equity is given to investors as reward.
11. Disruptive Technology
A innovation that brings something new to the world and changes the traditional way of doing something in a specific manner. Cell phone is a good example.
12. Dragon
A startup that raised more than one billion dollars from just one funding round is commonly known as Dragon. Of course, these are rare businesses that have concrete plans and potential.
13. Employee Stock Ownership Plans (ESOPs)
It is basically a plan that allows employees to take equity stakes in the company they work for according to their period of employment. ESOPs are beneficial for employees, and they also motivate them to work.
14. Freemium
Freemium (free + premium) is a popular startup term and a pricing strategy used by many to attract a large audience. The business offers basic products or services for free to its users, but money is charged for additional services and requirements. MailChimp, WordPress, and Spotify are some examples.
15. Hockey Stick
The word "hockey stick" describes the growth trajectory of a startup over a specific amount of time.
For a flawless hockey stick on the chart, the growth should start out simple and then suddenly accelerate.
16. Initial Public Offering (IPO)
A procedure in which a private company starts selling its shares to the public for the first time
17. Iteration
Iteration is the repeated and constant action taken to improve the product or service of a startup. The objective is to continuously enhance the product and, by extension, the business model based on data and feedback from customers.
18. Market Penetration
Market penetration shows a comparison between the sales of the company and the total estimated market size of that product or service. It is used to describe how well a good or service is doing in a particular market.
19. Minimum Viable Product (MVP)
A MVP is a lite version of a product that startups use to get feedback from early customers. The goal is to validate and test the idea of a product on the market.
20. Pitch Deck
A pitch deck is something that startups create to convince potential investors to fund their startup.
It is a presentation of averagely 12–14 slides that provides an overview of traction, business model, financials, team info, planning and strategy, revenue model, and many more.
21. Pivot
A change in the business model of a startup is often referred to as business pivoting. It could be a change in the output of the company, usually to better understand and meet customers requirements.
22. Pre - Seed Funding
A pre-seed fund is the earliest stage of funding that comes from angel investors, VCs, friends, etc. to validate the idea of a startup in the market.
It is used to test and analyse the ideation process. A pre-seed fund can also be used to develop a prototype and pitch deck to attract potential investors for the next funding round.
23. Retention
Customer retention is the ability of a venture to keep a customer in the business. The higher the customer retention, the more customers purchase and repurchase from the company. Good customer retention is more than just selling a product.
Employee retention is another term used when it comes to business talk. It means how good a company's relations are with its employees.
Loyalty, trust, customer feedback, offers, and discounts may boost retention.
24. Seed Fund
First official funding round that can be used to build the basic structure of a new startup. At this point, startups need to grow further. They use this capital for employee salaries, market research, making business plans, legal costs, etc.
Angel investors, friends, family, personal finances, and bank loans are some of the sources for seed funds. It's the first step before a startup faces institutions and firms to raise funds. Many times, a sample product and pitch deck are also built with this capital.
Series A, B, and C are further funding rounds that come into play after seed funding.
25. Startup Accelerator
A startup accelerator is often an organisation that offers a short-term, professionally designed programme, usually of 3 months, to startups that will help them grow through mentorship and education, making critical connections with investors, managing financing, etc.
In startup jargon, the term "accelerator" is different from "incubator."
Typically, incubators take a low equity percentage in exchange for the space and resources they give to convert an early-stage startup into a stable business, while accelerators focus on ventures that are somewhat stable and need guidance and connection throughout their growing phase.
26. Startup Incubator
This startup term refers basically to a firm that helps ventures in their early stages grow by giving them access to resources and support that they might not have found alone.
Incubators are mostly government organisations that usually focus on scaling until an idea turns into a revenue-generating business.
27. Sweat Equity
Sweat equity shares, as defined in Section 2(88) of the Companies Act of 2013, are the rewards given to specific employees of a company for exceptional contributions to the accomplishment of a specific project or task.
28. Unicorn
Privately held startups with a value of over $1 billion are termed unicorns.
29. Valuation
The professional judgement of how much money a business is worth.
30. Value Proposition
The features and benefits (value) that startups deliver to their customers through their products and services
31. Venture Capitalist
"Venture capitalist" is a fancy-looking word used to describe individuals or groups of investors that are interested in investing in a newly born startup in exchange for equity.
32. Vesting
Vesting is an advantage given to employees that offers them ESOPs of that company if they fulfil a given period of employment.
Employers often adopt this tactic to retain highly skilled employees.
Conclusion
Because it was overwhelming, time-consuming, and confusing for most of the beginners, an article on "startup terms that are more frequently used" was needed. Entrepreneurs must speak the startup language to effectively manage their business.
That's all for this article. We hope you found what you were looking for.
It's now your time to tell us which term in business talks most frequently threw you off guard. Comment below!
