36 Generally-Used Startup Phrases Outlined

In case you’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 will possibly really feel advanced shortly.

I’ve now labored with a number of startups in my profession and know what an enormous studying curve it will possibly really feel like at first. Typically, it even feels as if individuals are talking one other language.

That’s as a result of for each stage of the startup journey — from discovering traders to launching your organization to taking the enterprise public — there are a whole lot 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 it’s best to know and simplify ideas and phrases you’re prone to encounter.

In case you’re hoping to tackle the startup world or brush up in your startup data, I’ve created this information to the important thing startup phrases each aspiring entrepreneur ought to know.

Desk of Contents

An accelerator is a company that provides 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 means of Y Combinator and got here out with an improved enterprise mannequin and business connections.

Instance: “In alternate 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 signifies that a small (and certain failing) enterprise is bought for its workforce. A bigger firm would possibly purchase out one other firm and cast off the product — merely shopping for the group to poach its gifted workers.

Instance: “When the tech big acqui-hired the small AI startup, they shut down the startup’s product however built-in its gifted engineers into their very own staff.”

3. Angel Investor

An angel investor is somebody who provides the primary funding to a startup. This particular person believes within the startup’s concept or answer and supplies the entrepreneurs behind it with the cash to get began.

Instance: “The angel investor supplied $100,000 in seed funding to the startup in alternate 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 means of bootstrapping.

Instance: “The founders have 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 3 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 traders 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 further funding.”

7. Cliff

The cliff for vesting is a time period required earlier than workers can declare percentages of their shares. The cliff is often one yr, and it is meant to maintain workers — significantly CEOs — round by means of the early levels slightly than taking the advantages and leaving.

Instance: “The startup’s inventory possibility plan included a one-year cliff, that means workers needed to keep for a minimum of a yr earlier than any of their choices vested.”

8. Co-Working House

A co-working house is an workplace that’s shared by workers from totally different firms. This mannequin works significantly nicely for startups as a result of they will pay a smaller price to make use of the shared amenities in comparison with renting or shopping for a full workplace house for a small variety of workers.

I work in a co-working house occasionally and love the publicity and networking alternatives I get with it.

Instance: “The early-stage startup rented desks in a co-working house, permitting them to have an expert work setting with out the excessive prices of a personal workplace.”

9. Cottage Enterprise

Cottage companies are startups that work greatest 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 slightly than a traditional workplace house.

Instance: “The handmade cleaning soap firm began as a cottage enterprise, with manufacturing going down 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 traders and shoppers who put up cash for a enterprise — purely due to their quick, particular person curiosity in its providing. Many startups will supply pre-orders of their services or products at discounted charges to lift cash by way of crowdfunding.

Kickstarter, for instance, is a crowdfunding platform.

Instance: “The {hardware} startup raised $1 million by means of crowdfunding by pre-selling their revolutionary 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 turned 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. Sometimes, these customers can give you insightful and sincere suggestions that can assist you enhance the services or products earlier than taking it to the bigger target market.

I’ve seen the ability of early adopters in motion. In actual fact, 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 supplied essential suggestions on the beta model of the app, serving to to refine options earlier than the general public launch.”

13. Exit Technique

Entrepreneurs typically arrange an exit technique, which is how they plan to promote their firm by way of mergers, acquisitions, or IPOs. Doing so will permit the founder to switch possession and generate profits to pay again traders.

Instance: “The founders’ exit technique concerned rising the corporate to $100 million in annual income after which searching for acquisition by a bigger tech agency.”

14. Freemium

A freemium mannequin is a well-liked alternative for startups. It refers to providing prospects a restricted model of a services or products free of charge with extra superior choices out there at further price.

For instance, you would possibly have the opportunity to enroll in Canva — a well-liked design platform — free of charge, however you may’t entry premium inventory pictures, 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 undertaking administration software program used a freemium mannequin, providing fundamental options free of charge and charging for superior performance.”

15. Go Public/IPO

Going public is when an organization places its inventory on the general public market by means 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 and marketing startup time period that refers to a targeted technique utilizing low-cost strategies to shortly develop an organization. Many firms nowadays flip to social media for development hacking — hoping to go viral with their services or products with out burning an excessive amount of capital on advertising and marketing.

Instance: “The social media app used development hacking methods, reminiscent of incentivized person invitations, to quickly develop its person base with out a big advertising and marketing finances.”

17. Hockey Stick

Traders need a startup’s development curve to seem like a hockey stick, probably doubling metrics like gross sales or variety of energetic customers annually.

Instance: “The biotech startup joined a university-affiliated incubator, having access to lab house and mentorship from skilled scientists.”

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18. Incubator

An incubator affords companies assets and mentorship to get by means of a number of the preliminary rising pains of startup life. This can be a long-term program, not like an accelerator, usually providing startups these assets and connections in alternate for fairness.

I’ve written case research for startups which have gone by means 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 house 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 embrace a mushy 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 firms from potential shoppers.

I‘ve been a part of a number of product launches, they usually’re all the time thrilling. One consumer’s app launch occasion I attended changed into an impromptu celebration once they hit it large on Product Hunt.

Instance: “The startup’s product launch occasion attracted media consideration and resulted in a surge of latest person sign-ups.”

20. Lean

The purpose of a “lean” startup is to construct and take a look at merchandise as shortly and inexpensively as potential to enhance the product by means of trial and error slightly than constructing out a completely developed product that may not appeal to patrons.

Instance: “Following lean startup ideas, the staff developed a minimal viable product and iterated based mostly on person 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 appeal to traders, you want a powerful pitch deck — a presentation on key elements of your enterprise, together with your product, goal market, and marketing strategy.

The purpose is for the presentation to be brief, informative, and attractive to point out traders you’ve an amazing, sustainable concept that can give them an amazing return on their investments.

Instance: “The founder’s pitch deck included 12 slides overlaying the issue, answer, 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 realize traction, the startup executed a pivot to concentrate on B2B prospects as a substitute.”

24. Scalability

This startup time period refers back to the sustainability and potential development of a enterprise. The purpose of most companies is to develop and supply items or companies to an rising quantity of customers by means 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 and marketing marketing campaign crashed their web site.

Instance: “The startup’s cloud-based structure ensured scalability, permitting them to deal with a 10x improve in customers with out vital infrastructure modifications.”

25. Scrum

“Scrum” refers to an agile undertaking administration methodology that was initially designed for making choices inside growth groups — however it may be utilized to different areas of a enterprise.

The scrum framework focuses on schooling, creativity, and collaboration amongst three entities: the product proprietor, the scrum grasp, and the scrum staff.

• Product proprietor: A single particular person with intensive data of the person who manages and prioritizes merchandise.
• Scrum grasp: The scrum grasp helps take away roadblocks to assist all the scrum staff full their work.
• Builders: As the primary element of the scrum staff, builders collaborate and resolve on tips on how to get their work accomplished and what instruments and methods the startup ought to use.

Instance: “The event staff used scrum methodology, with each 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 traders. This funding spherical comes after discovering angel traders 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 traders and early-stage enterprise capital companies.”

27. Solopreneur

An entrepreneur usually has plans to begin and develop a enterprise. A solopreneur, alternatively, begins and probably 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 marketing, and managed buyer help.”

28. Sweat Fairness

Sweat fairness is basically human capital. Whenever you’re simply beginning out, you won’t even have sufficient funding but to pay for worker companies. Staff who threat placing within the work for a startup can nonetheless obtain fairness — one thing that might repay large 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 increase $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 price, however that is decided in two methods: pre- and post-money valuation.

• Pre-money valuation: That is an estimate of how priceless your organization is earlier than you obtain any funding. It might probably assist traders decide if your organization is price investing in.
• Publish-money valuation: That is how a lot your organization is price 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 consumers who cease utilizing a services or products. It is calculated by dividing the variety of prospects misplaced throughout a interval by the overall quantity at first. You need a low churn charge since this implies you’re retaining prospects.

Instance: “A SaaS startup may need a month-to-month churn charge of 5%, that means they lose 5% of their present prospects 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 signifies that prospects 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 is not all the time straightforward to attain. I as soon as collaborated with a startup that pivoted 3 times earlier than lastly discovering its area of interest. After they did, although, their development exploded.

Instance: “The social media app achieved product-market match when it noticed exponential person development and excessive engagement charges inside its goal demographic.”

33. Buyer Acquisition Value (CAC)

CAC is the overall price of buying a brand new buyer, together with advertising and marketing and gross sales bills.

I’ve seen firsthand how important understanding CAC is for startups. One in all my shoppers was spending approach an excessive amount of on paid promoting, leading to a CAC that was unsustainable. We labored collectively to optimize their content material advertising and marketing 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 overall 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 development, demonstrating {that a} services or products is gaining market acceptance. You may measure it by means of metrics like person engagement, income development, or buyer acquisition. Traders use traction to validate a startup’s potential for achievement and appeal to extra funding.

Instance: “The meals supply app demonstrated robust traction by rising its person 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, based mostly on its present burn charge and money readily 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 turn into worthwhile or safe further funding.”