Mar 24, 2024

Startup Speak: 30 More Commonly-Used Startup Terms Defined - Part 2

Expanding Your Startup Vocabulary

Startup Speak: 30 More Commonly-Used Startup Terms Defined - Part 2

The startup world is rife with specialised jargon and terminology that can sometimes seem like a language of its own. Following up on our initial guide to commonly used startup terms, this sequel dives deeper into the lexicon of the startup ecosystem. Whether you're pitching to investors, discussing strategies with your team, or networking in the startup community, understanding these terms can greatly enhance your communication and strategic thinking. Here's a continuation of our glossary, defining 30 more essential startup terms.

1. Accelerator:

A fixed-term, cohort-based program that includes mentoring, training, and often an investment in startups, culminating in a public pitch event or demo day.

2. Beta Test:

A phase of product testing where a sample of the intended audience tries the product in a real-world environment to identify bugs or improvements.

3. Bootstrapping:

Funding your startup through personal finances or the revenue of the new company, rather than seeking external investment.

4. Cap Table (Capitalization Table):

A spreadsheet or table that shows the equity capitalization for a company, including all the company's securities (stocks, options, warrants, etc.) and who owns them.

5. Convertible Note:

A short-term debt that converts into equity, typically in conjunction with a future financing round; the investor loans money to a startup and instead of a return in the form of principal plus interest, receives equity in the company.

6. Crowdfunding:

Raising small amounts of money from a large number of people, typically via the Internet, to fund a new business venture.

7. Disruptive Technology:

An innovation that significantly alters the way that consumers, industries, or businesses operate, often displacing old technologies.

8. Due Diligence:

An investigation or audit of a potential investment or product to confirm all facts, such as reviewing all financial records, plus anything else deemed material.

9. Equity Financing:

The act of raising capital through the sale of shares in an enterprise.

10. Freemium:

A business model, especially on the Internet, whereby basic services are provided free of charge while more advanced features must be paid for.

11. Growth Hacking:

Strategies focused solely on growth, used by startups to rapidly grow their business and user base with minimal expense.

12. Incubator:

An organization designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services.

13. Landing Page:

A single web page that appears in response to clicking on a search engine optimized search result or an online advertisement. The landing page typically displays directed sales copy that is a logical extension of the advertisement or link.

14. Lean Startup:

A methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable.

15. Market Penetration:

The act of increasing market share of an existing product, or promoting a new product, through strategies such as advertising, lowered prices, or volume discounts.

16. Non-Compete Agreement:

A contract between an employee and an employer in which the employee agrees not to enter into competition with the employer during or after employment.

17. Outsourcing:

The business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company's own employees and staff.

18. Proof of Concept (POC):

Evidence, typically deriving from an experiment or pilot project, which demonstrates that a design concept, business proposal, etc., is feasible.

19. Return on Investment (ROI):

A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.

20. Scalability:

The ability of a startup to grow significantly without being hampered by its structure or available resources when faced with increased production.

21. Stakeholder:

Any person, group, or organization that has an interest in the success and progression of a company.

22. Traction:

The progress of a startup company and the momentum it gains as the business grows.

23. Value Proposition:

An innovation, service, or feature intended to make a company or product attractive to customers.

24. Vesting:

The process by which an employee accrues non-forfeitable rights over employer-provided stock incentives or employer contributions made to the employee's qualified retirement plan account or pension plan.

25. Viral Marketing:

Marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes.

26. Warrant:

A derivative that confers the right, but not the obligation, to buy or sell a security – typically equity – at a certain price before expiration.

27. White Label:

A product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it.

28. Working Capital:

The capital of a business that is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

29. Customer Lifetime Value (CLV):

A prediction of the net profit attributed to the entire future relationship with a customer.

20. Elevator Pitch:

A succinct and persuasive sales pitch that is intended to spark interest in what your startup does.

Understanding these terms not only helps in gaining a deeper insight into the startup ecosystem but also empowers entrepreneurs to navigate their startup journey with more confidence and clarity. Whether you're discussing strategies with your team, pitching to investors, or networking in the startup community, a solid grasp of this terminology can significantly enhance your communication and strategic planning.