The life of an Entrepreneur begins with a lot of challenges, thrill, and adventure. Apart from raising funds, crafting plans, managing time, one of those major challenges is getting acquainted with startup terms. It might sound silly, but the truth is that many newbies just give a confused expression whenever they hear an unconventional startup term.
Why as an Entrepreneur you Should Know Startup Terms
You might remember how you started the journey of forming words and sentences. It all started with the Alphabets. But it was not a one-day process either. You learned, memorized, practiced, and eventually grasped the art of forming lovely sentences. Similarly, Startup terms are the Alphabet of learning Entrepreneurship, which you must not skip at any cost.
Understanding and using key startup terms should be a reflex action in the daily operation of the business and lifestyle of every entrepreneur. You can be managing time and, at the same time hustling back and forth, translating every other startup term. It will eat up much of your precious time as an entrepreneur.
Hence, one of the prerequisites of becoming an entrepreneur is to get familiar with the startup language. Whether you belong from a technical or non-technical background, you must always carry these startup terms in your pocket.
In this article, we have mentioned 51 key startup terms with a brief definition for each term that you ought to know. You can use this glossary as a reference for learning, or even as a memory jogger at times! So let’s dive into the world of Startup terms.
51 Must-Know Startup Terms
A person who has a flock of ideas but hasn’t started his business is a wantrepreneur. They are always in the state of planning but don’t get started. These are the people who don’t realize the worth of ambitions.
NOTE- However, an aspiring entrepreneur is not a Wantrepreneur. Aspiring entrepreneurs may have established their first semi-successful business but still toil daily to figure out how to shoot up to scale. In contrast, a Wantrepreneur might start multiple businesses but drops them in a couple of months.
Validation is a signal that proves the need and demand for a product. The signal might be the process of establishing documentary evidence confirming an activity carried out in testing to maintain the stage- level compliance.
A business could be claimed to be scalable if it created and validated a repetition of business models that fulfill user needs. Every startup aims to be scalable.
When you launch your startup, accelerators are such fixed-term, cohort-based models that can help your idea spread quickly for a few months by financing you. They do so by providing you with fundraising and mentorship and educational components. They mainly support the early- stage of growth-driven companies through education and financing.
Incubators operate on a flexible time frame ending to provide long term advertising programs comprising mentorship, coworking office space, training center, and new connections. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for regional or national economic development.
Related – Startup Accelerators Vs Incubators
Coined by venture capitalist Aileen Lee in 2013, a privately owned startup valued over $1 billion is known as a Unicorn. The potential market opening for unicorns is normally global, which can give way for rapid growth.
Startups that can raise over one billion dollars in the very first round of funding are called dragons. A dragon can also be defined as a company that returns an entire fund — a “fund maker.”
Bootstrapping is a process where entrepreneurs combine human capital with their savings to build their startups without depending on raising capital( external input). It is also referred to as a self- starting process. Since the funding bar is increasing day by day, many choose to bootstrap in their startup’s early stages, And when they find it suitable, they go for raising funds.
It’s quite known that entrepreneurs might guess the odds of bringing a minor change in the product at the right time. This method of repeating the procedures with certain changes for targeting the important aspect of a Business is termed as iteration. It is often done to get the desired objectives of the business.
There might be times when a plan seemed to be the right, but you soon realized it isn’t the one. That’s when a major change is needed, especially in the way to build your profile, make money, or sell your product. This is called pivoting. So, a pivot usually occurs when a startup makes a significant change after ascertaining (usually through market research) that their product isn’t meeting the intended market’s expected requirements.
NOTE: Entrepreneurs just accept iteration and pivot with open arms.
A product that is generally created without spending many resources, with the main motive of testing an idea’s working, is a minimum viable product. Usually, the very first versions of any service, including the core features, are MVP. They are tested to resolve the risks associated and further move ahead with advanced characteristics.
The lean methodology follows a custom of building a sample and test quickly rather than build an advanced product and directly associate it to the customers. The lean startup method promotes improving products that consumers desire so that an existing market will be ready with the product launch. MVP is a part of the Lean methodology.
Agile focuses on developing advanced features and building and testing iteratively with the aim of quality learning and self-development. It involves collaborating, learning from each other, getting feedback from users.
Software as a System is a centrally-hosted business model that allows your customers to use your product for free under monthly subscription without installing your application. It is software licensed on a subscription basis. It is sometimes referred to as “on-demand software” and was formerly referred to as “software plus services” For example, many resumes making websites and educational websites give access to free courses with limited features for a monthly period.
Freemium is an amalgamation of the words “free” and “premium”. In SaaS, a pricing strategy that provides access to a few enticing features of a product to make the user upgrade to the paid plan is freemium.
REMEMBER- Freemium model has the capability to generate traffic.
Platform as a Service is a Cloud Computing model comprising Software and hardware tools that require to be downloaded for application development. It delivers a platform to develop, run, and manage business applications without maintaining the infrastructure which software development processes mainly require.
Examples: AWS Elastic Beanstalk, Windows Azure, Heroku, Force.com, Google App Engine
The state of taking over a startup or business by another company by purchasing its shares or assets is known as acquisition.
Acqui-hire describes acquiring a company with the sole aim of recruiting its employees, rather than to establish power over its products or services. Many established companies decide to acquire small firms for raising human capital. Such acquisitions are termed as an acquihire.
Continuous alpha tests are conducted before the product enters a market. This first release stage is called the Alpha release. Alpha releases are the early versions of the next major update. Here, the developers ensure that the product undergoes several tests to identify and eliminate bugs or errors.
A company releases a beta version when its product is a feature ready but might have bugs that can be identified only when a wide layman user base tries it out. Thus, beta release forms the crash test for your startup.
Board of Directors
The board of Directors is those under whom all the mentorship, guidance, and connections occur. These members assist the founder with a wise decision in hiring, fundraising, business development, etc.
The non-technical founders are responsible for the building and execution of partnership and strategic planning. This non-technical responsibility is called business development.
Business Model Canvas
Business Model Canvas is strategic management advocating a lean startup template for developing new or existing business models. It is a visual chart with elements representing a product’s infrastructure, customers, and finances.
A pitch deck is a quick investor or marketing presentation that features the main areas of a startup, such as product, market, team, value proposition, and traction.
NOTE – Keep it simple and short.
This Startup terms promise value from a customer to be delivered, communicated, and acknowledged for a brand prospectus. Your value proposition should paint a clear picture of how your product solves problems, what benefits customers can expect, and why customers should prefer you over your competitors.
The products created by businesses to consumer companies (B2C and B2B companies) purchased and used by customers are called consumer products. The companies do not use these products. For, e.g., Samsung selling a phone is a consumer product.
Unlike consumer products, the products used by the companies themselves are enterprise products.
The features that can distinguish one startup from another on a competitive edge are known as competitive advantages. Features can include innovation, partnerships, intellectual property, and exclusive rights. A competitive edge includes capturing a growing market quicker than anyone else does.
A protected and patented invention having copyrights and trademarks. Such property is not to be lifted or stolen without the prior permission of the owner.
Customer development is the lean methodology stage where you discover and validate your customer by interviewing them.
Product fit or Market Fit
If your customer acquisition cost is less than your clients’ lifetime value, Existing customers are referring to other potential buyers Like them. It’s referred to as the right product or market fit. Market fit lowers your customer acquisition cost, thereby expanding your net promoter score.
A marketing campaign can be claimed successful only if it receives its target less than the return generated. Such a result is owing to a methodology called Growth Hacking. The people who use unconventional strategies to boost growth at costs that are much lesser than the average cost required to achieve the same targets are called Growth hackers.
Evangelists are the categories of buyers who come first, believe the product first, buy them, and convince others to buy it.
Many startups succeed at acquiring innovators but fail to control the rest of the market. That gap between the innovators and the rest is called the chasm.
The strategies that can get the website to achieve higher SERP rankings or Google Search engine rankings. Without these, a startup needs to invest more in paid ads to get new clients.
The set of ideal buyers having similar objectives, demands, and needs is defined as a Target Market. As a startup owner, you can define your ideal customers through categories like psychographics and demographics.
Traction is the evaluation of your performance metrics. Usually, investors evaluate your traction overtime before proceeding with the investment if you go for funding options.
Inbound marketing is a technique for attracting customers to products by tailoring valuable content. It is done via content marketing, blog posts, social media marketing, conducting seminars, search engine optimization, and branding.
Also called Interruption marketing, outbound marketing is a technique where a company starts the conversation and sends its message to the audience through continued advertising, promotions, public relations, and sales. It is a traditional method of marketing.
The process of raising capital by providing business shares in return is called equity financing. Venture Capitalist, Angel Funding, and Initial Public offering are different forms of equity financing.
An individual with a high net worth who believes in investing money in the business to exchange an equal share of the company is a venture capitalist.
Venture Capital Firm
A venture capital firm is a large sum collected from venture capitalists and investors to fund startups with the potential to be successful at a later stage.
An individual who believes in investing his share of money at an early stage of business in exchange for some shares of the business is an angel investor.
An investment pool formed by various angel investors who invest proportionate quantity in startups of their choice. However, the startups must go under the AIF regulations of a country. For example, in India, the AIF(Alternative Investment Fund) regulations are introduced by SEBI( Securities and Exchange Board of India).
IPO/ Going Public
It is a method of public offering where businesses raise funds from the public. Here the first sale of shares of a company is sold to institutional investors and retail investors.
A type of funding in which a business raises money by selling a bond to the investors with the promise of repaying the borrowed money with interest in a stipulated period. Debt financing is more common in the case of late-stage startups.
The state at which an investor sells his stakes in a company for a profit or loss. Usually, investors exit with the hope of gaining profits, but at times, they just exit to get rid of their stake in case their company is not working well.
The process of rejuvenating the stability of the capital structure in a startup by restructuring its debt is recapitalization. It encompasses exchanging one form of financing for another, such as replacing preference shares with bonds.
Crowdfunding is a process of raising funds from an influential group of people and donating small amounts to social impact firms and NGOs.
This startup term refers to an inadequate budget on which a startup operates. In most common cases, bootstrapped or self-funded startups have to keep development and marketing costs extremely less until they start making substantial revenue.
When a business sells cheaper than initially reaches to the less profitable customers, it slowly takes over the target industry or market known as disruption.
Final Thoughts- Startup Terms
Startup terms vary like the Nova Scotian weather. One day every other business wants to be a unicorn, but the very next day, everyone is a decacorn. The trend of Startup terms keeps changing.
We hope that you have found this article useful and gained some knowledge from it. Use this glossary as a starting point. Remember that the Startup terms are the Alphabet. Build up a solid understanding of these key startup terms for your next amazing venture.
So, now that you have all the necessary information to take the first step into the world of entrepreneurship, are you ready?
Also Read – What Is Entrepreneurship – A Complete Guide On Entrepreneurship0
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