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Startup Jargon Words
Terms in this set (43)
Accelerator (aka Incubator)
Not part of a car as one might assume, but a center where start-ups are "incubated" through mentorship, space and sometimes cash.
A rich individual potentially interested in investing in your company. Or, more technically, according to the SEC: "A natural person with income exceeding $200,000 in each of the two most recent years or joint income with spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or A natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person." What this means for your start-up is you must require potential investors to prove that they can afford to risk their money in your start-up, in order to comply with the law.
Advertorials / Advertainment
Paid content that is meant to look and feel like a real story or blog post. More people are fooled than you'd think - or as the "tainment" part implies, readers are interested enough that they don't care that they are being pitched. As display ad pricing and effectiveness have decreased, more companies are turning to advertorials to capture ad revenue.
"An extremely pretentious way of saying on the vanguard since every person in start-ups thinks he or she is there."
Using "friends and family" cash to get going. As Carey Martell, Founder of Power Up TV put it, "Boot-strapping a startup means ramen noodle days. Every time you want to splurge on something you think, 'Well I could have that $20 steak dinner, or I could hire a virtual assistant from the Philippines.'
B-to-B = Business to Business.
Your company sells things to other companies.
B-to-C = Business to Consumer.
Your company sells stuff to the masses.
Burn Rate (aka Run Rate)
How fast you are blowing through your cash. It's not unusual for a start-up to lose large sums of money for several years before breaking even, or — please oh please — making a profit.
Customers lost subsequent to acquisition in a subscription-based business model. Because of the churn rate, your growth might not look like you think it will.
Usually applies to vesting schedules (shares given to employees over time). Cliffs are a way for the CEO to fire employees or let them leave without giving them stock within a limited period of time (usually 1 year). Cliffs are also used on CEOs by investors to make sure the CEO sticks around after getting the cash.
cottage business/cottage industry
A nice business but not something massively scalable. If you have one, you're not a good fit for VC, but this does not mean you should not pursue your dream or that you will not be very successful!
deck (aka pitch deck)
A 10-slide power point presentation that covers all aspects of your business in a concise and compelling way. There is a standard format and real artistry to making a good deck. Do your homework, get lots of feedback, and consider hiring a graphic designer to polish the final version.
Something that completely changes the way society does something (e.g. Uber/Lyft vs. Taxis or Amazon vs. in-store shopping).
How you will sell the company and make your investors lots of money. Who is going to buy you and why?
FMA = First Mover Advantage.
Not every start-up is the first to market, but if you are, you want to point that out to investors. Be aware that this can be both a pro and con, as you may have to educate your market as you go, so the sales you make will cost more than they would in a market with clearly established demand.
You give the basic product away for free and then try to upsell features to your customers. This marketing ploy is often used in directory businesses.
Adding a game layer to a website or product experience that encourages people to use it with rewards of various kinds. People love games.
A term coined by Sean Ellis to describe a marketing technique that focuses on quickly finding scalable growth through non-traditional and inexpensive tactics such as the use of social media.
The shape of the growth curve VCs want to see and believe! This means your start-up will have to double sales every year.
This can be a patent (costs $25k generally and takes time to obtain) or a secret sauce or formula like Coke. Not every start-up has IP, but if your business depends on it, you better protect it!
Code for try something, do it wrong, and try it again in a slightly different way with the hopes of achieving a better result.
To start a company or push a website live.
Similar to Growth Hacking. The core mission of a lean start-up is to prove the business concept as quickly and cheaply as possible.
Use something — technology, partnerships, etc. — to your advantage.
loss leader pricing
Selling something at a loss as a form of marketing expense to bring in customers you expect repeat business from.
low hanging fruit
The easiest thing your company can do to bring cash in the door. Often hard to identify, but crucial for start-up success.
How much of your potential market are you capturing and how quickly. VCs want to know.
How you are making money — or more often, how you plan to make money
minimum viable product
The bare-bones version of a product required to achieve proof of concept. Often used in the creation of new software that will be Beta tested, and later upgraded with extra features.
Change directions as a company. This is usually used to describe going after a different market segment or using an established technology for an entirely new purpose.
Profitable enough to cover costs and basic living
expenses for everyone working at a startup.
A site built for optimal viewing of a website across all devices. The other options are adaptive design and bad design.
return on investment
What the investor can expect to get for what they put in. It can also be used to describe the results of a particular marketing campaign's success. You want things to be "ROI positive."
How long you have until the cash runs out and you must turn off the lights
software as a service
You sell subscriptions to use your software
Something that can grow to a huge size because the market and demand is big enough or because you will be able to move into different markets with your product via Pivoting or Iterating
Shares of your company given in exchange for work done. This is a good recruiting tool to help you attract passionate talent you can't afford to pay at market rates.
The document that outlines what the Investors will get for what they put in — including % ownership and voting rights.
Proof that people are actually buying and using your stuff.
What your company is being valued at. "Pre-money valuation" is the value before you take investors' cash. "Post-money valuation" is that amount plus the investment put in.
The feature(s) or elements that make your business or product uniquely attractive to consumers.
A product you are selling but have not actually made (and may never make). It is a way to test market demand. Some people think it is sleazy, but it is very common.
They have cash, but you might not want it.
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