Every service begins with an idea. Transforming this idea to solve a common problem may be the beginning of your startup journey.
To be well-versed as a startup owner, it is quite important for you to be familiar with some of the common startup terms used in the startup sector across the globe.
In this article, we’ll take you through 24 terms used in the Startup field but let’s grasp the meaning and understand what a Startup means.
What is a Startup?
In its simplest definition, a startup is a business that is focused on a single product or service to introduce the product/service to the market and aim for expansion.
Some common characteristics of a startup include:
Innovativeness
Technology-oriented
Strong company ethic
Funded by investors
Flexibility and Scalability
Few number of employees
It’s quite important to be able to distinguish a Startup from a Small Business. The knowledge here helps in narrowing your focus on the path your idea falls within.
Without further ado, let’s dive in.
24 Common Terms Startup Owners Need to Know
Accelerator – Accelerators are companies that focus on speeding up the growth of existing companies that already have a minimum viable product (MVP), with an established product-market fit.
Angel Investor – Angel investors are typically wealthy individuals who invest their money in startups.
Bootstrapping – The process of using only existing resources, such as personal savings, and equipment, to start and grow a company without external help.
Boot Camp – This is a training camp for learning various types of skills and is designed to get you ahead in your start-up journey.
Burn Rate – The burn rate denotes the speed at which an unprofitable company is spending its venture capital to finance overhead before generating positive cash flow from operations.
Business Model Canvas – A strategic management template used to communicate a business idea clearly, develop new business models, and document existing ones.
Cap Table (Capitalization Table) – A cap table is a spreadsheet that shows who owns how much of your company. Each row may list a shareholder, their ownership percentage, the number of shares that percentage represents, the value of each share, and the total value.
Exit Strategy – A contingency plan by a business owner, investor, or venture capitalist to sell their ownership in a company, avoid further losses, or dispose of tangible business assets once predetermined criteria have been met or exceeded.
Hackathon – Coined from the words “Hack” and “Marathon”. This is an event in which a large number of people meet to collaborate and creatively solve problems by engaging their IT skills.
Incubators – a program designed to support your early-stage business to develop until it is able to sustain itself in the market.
Initial Public Offering (IPO) – The last stage of startup success. It is the process where private companies sell their shares to the public to raise equity capital from public investors. It’s an opportunity for company owners to cash out their remaining shares for personal income while generating funds for further growth for the company.
MVP (Minimum Viable Product) – MVP is the most basic version of the product that a company wants to launch in the market. The aim is to receive responses from prospective consumers or buyers.
Runway – Runway is the amount of time, in months, a startup has before it runs out of cash.
Pre-seed Funding – Refers to funding secured to demonstrate that there is a market need for your product or service. Also called “family & friends” funding. It’s the first stage of funding for startups.
Product-Market Fit – A product that satisfies the needs of the market. It is a stage where a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability.
Pitch Deck – A presentation created by entrepreneurs to raise venture capital from investors for your business.
Scalability – The capacity and ability of a business to grow and meet an increased demand in the market.
Seed Funding – It is the money raised by a startup in its infancy or early stages.
Seed Investors – Seed investors are venture capitalists who invest in the launch or early stages of a startup.
Series A – Refers to funding received after a startup product has been proven to be viable. Comes right after pre-seed funding. It signifies the beginning of venture capitalist investment, and shares of the company are offered in exchange for capital.
Series B – Funding received by startups in this stage has dedicated users and steady streams of revenue. At this point, you’ve proven you can scale your product/service.
Series C – Series C funding is for a company performing excellently in growth and aiming for regional, continental, or global expansion.
Series D – This refers to the stage where a company decides to seek more investment to purchase a competitor or bridge gaps during the Series C funding.
Venture Capitalist – An investor or company that provides funding for startups in exchange for equity. Common types are Angel Investors, Seed Investors, and Growth Investors.
Conclusion
Now that you are familiar with some of the common terms used by startup owners, you can proceed to learn more about kick-starting your startup journey. You can also read our article on 21 MSME terms every entrepreneur should know.
