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Startup jargons every entrepreneur ought to know


If you are new to the entrepreneurial start-up world, you will probably come across a lot of technical jargon in use by your potential investors. You frequently find yourself in a situation where business people use acronyms or lingos which are crucial elements of a great pitch. Among endless expressions and abbreviations, here are some of the most basic jargon pivotal for aspiring and early entrepreneurs.


1. Pitch Deck: It is a short version of a business plan which presents key figures to potential investors in order to win over them. The investor pitch deck is usually used during face-to-face and online meetings with potential investors, customers, and partners.


2. Lean Startup: A lean startup is an approach to building new businesses based on the belief that entrepreneurs must investigate, experiment, test, and iterate as they develop products. The lean startup method advocates developing products that consumers have already demonstrated they desire so that a market will already exist as soon as the product is launched. Dropbox is one of the best-known examples of a business that has grown using lean startup principles.


3. Pivot: A pivot is essentially a shift in business strategy to test a new approach regarding a startup’s business model or product. It includes going after a different market segment or using an established technology for an entirely new purpose.


4. Exit Strategy: An "exit" occurs when an investor decides to get rid of their stake in a company. Also, if the startup eventually goes public, then the venture capital firm can "exit" their stake by selling their shares on the open market.


5. Growth Hacking: “Growth hacking” was coined by entrepreneur Sean Ellis. It refers to the rainbow of tactics used to specifically drive traffic to a startup as quickly as possible– without spending too much. Digital Marketing can be categorized as a tactic.


6. Hockey Stick: Hockey stick growth is a term used to describe a revenue growth pattern that many successful startups have achieved. It typically outlines where the startup begins, their first couple of years hustling, and then a turning point. The turning point is where the company starts to grow, and when there's no turning back.


7. Burn rate: The burn rate is used by startup companies and investors to track the amount of monthly cash that a company spends before it starts generating its own income. A company's burn rate is also used as a measuring stick for its runway, the amount of time the company has before it runs out of money. So, if a company has $1 million in the bank, and it spends $100,000 a month, its burn rate would be $100,000 and its runway would be 10 months.


8.Churn Rate: The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period. It is also the rate at which employees leave their jobs within a certain period. A high churn rate could adversely affect profits and impede growth.


9. Low Hanging fruit: "Low-hanging fruit" is a common metaphor in business that refers to doing the easiest task first. In business, sometimes focusing on low-hanging fruit first as a strategy can lead to meeting targets quickly; sometimes it can lead to an accumulation of more difficult tasks. It is often hard to identify but is crucial for startup success. If the sales rep channels their effort toward the easiest sale, they are focusing on the low-hanging fruit.


10. Loss leader pricing: A loss leader is a product or service that is offered at a price that is not profitable, but it is sold to attract new customers or to sell additional products and services to those customers. Loss leading is a common practice when a business first enters a market. Essentially, a loss leader introduces new customers to a service or product in the hope of building a customer base and securing future recurring revenue. Gillette, for example, gives their razor units away for free knowing that customers must buy their replacement blades, which is where the company makes its profit.


11.MVP (Minimum Viable Product): A minimum viable product (MVP) is a development technique in which a new product or website is developed with sufficient features to satisfy early adopters. The final, complete set of features is only designed and developed after considering feedback from the product's initial users. It is often used in the creation of new software that will be Beta tested and later upgraded with extra features.


12.Vaporware: Vaporware is a product or service that has been announced and/or is being developed but very often never released. The term can also refer to products or services that are released far behind schedule or heavily promoted but do not exist beyond the idea or the minimum viable product (MVP) stage. Phantom was a console gaming system developed by Infinium Labs. A prototype was demonstrated in 2004, but its release was continually delayed and the company never announced that the product was canceled.


13. Vesting: Vesting is a legal term that means to give or earn a right to a present or future payment, asset, or benefit. It is most commonly used in reference to retirement plan benefits when an employee accrues nonforfeitable rights over employer-provided stock incentives or employer contributions made to the employee's qualified retirement plan account or pension plan.


14.Unicorn: A unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. The term was first popularized by venture capitalist Aileen Lee, founder of CowboyVC. Walmart paid $16 billion to acquire a 77 percent share of the Bangalore-based shopping site Flipkart which raised its valuation to $22 billion.


15.Bleeding Edge: Bleeding edge refers to a product or service, usually involving technology, that is available to consumers but is so new and experimental that it has not been fully tested and, consequently, may be unreliable. Early adopters could experience design flaws and bugs that have not been observed by the developers. The U.S. military uses bleeding-edge semiconductor technologies in its newest warplanes, battleships, and missiles.


16.Iterate: It is a code to try something, do it wrong, and try it again in a slightly different way with the hopes of achieving a better result. The Iteration Cycle is a process that you can use to improve anything over time. Watch, Ideate, Guess, Act, Measure are major steps of an iteration cycle.


17. Wantrepreneur: A person who wants to be an entrepreneur, but doesn’t take any steps towards his or her dreams.


18.Dragon: A startup that raises $1 billion in a single round of funds. Dragon startup aims to return the entire fund to the investors as they grow. All unicorns are not dragons. For example, Sequoia Capital did seven dragon investments (WhatsApp, FireEye, Palo Alto Networks, ServiceNow, LinkedIn, YouTube, Google).


19. Acqui-hire: An acqui-hire is when one company buys out the other one specifically to take the employees. It's a popular strategy with tech startups. A good acqui-hire can bring in a lot of new talent at the same time. An acqui-hire can reinvigorate a company and increase its earning potential. Swiggy, the Bengaluru based unicorn just made their first acqui-hire of 2019, the transaction involved the acquisition of Kint.io, which is a Bengaluru based AI startup.


20.Beta release: The second stage in product release is the beta stage. The major difference between alpha and beta stages is beta is tested on real users, unlike in-house testers. Most often, the product is released and deployed on the client’s site for the intended users and to receive real-time feedback. The beta release is undoubtedly important as with it, the product reaches its last testing stage just before it would be released.


21. Freemium: Freemium means the vast majority of your users use your product for free and a minority pay. Importantly, this means that freemium is NOT the same thing as "premium with a free sample." Plenty of software as a service (SaaS) companies have some sort of free option, but the goal is to have the majority of users pay.


22.Bubble: An industry, sector, or domain that is overvalued but the startups and investors working in it are not aware of the same. When the bubble bursts i.e. when the desired results are not met, the growth starts to diminish, the startups working in the sector tend to shut down and investors lose money. For example, WeWork's Neumann saw a flawed system and his combination of greed & smarts allowed him to exploit it.


23.Cliff: Cliff vesting is the process by which employees earn the right to receive full benefits from their company’s qualified retirement plan account at a specified date, rather than becoming vested gradually over a period of time. The vesting process applies to both qualified retirement plans and pension plans offered to employees. Cliff vesting is more commonly used by startups because it enables them to evaluate employees before committing a full range of benefits to them.


24. Ramen Profitability: Entrepreneur and venture capitalist Paul Graham popularized the term “Ramen Profitability” defining it as a startup that makes just enough to pay the founders’ living expenses. This is a different form of profitability than startups have traditionally aimed for. Ramen profitability removes the dependency on investors’ money.


25.Value proposition: Value Propositions are the products and services that create value for a specific Customer Segment. They do so by solving a customer problem or satisfying a customer need as it involves including a feature or elements that make your business or product uniquely attractive to consumers. For example, Stripe makes it clear that its web and mobile payment products are specifically made for developers and tech-savvy businesses.

26.Crowdfunding: Crowdfunding is a process of raising funds from a big group of people donating small amounts respectively to an organisation. Particularly applicable to social impact firms and NGOs. Crowdfunding is majorly done via online crowdfunding platforms. The organisations that raise crowdfunds keep all the donations while giving away a small percentage as the fees to the crowdfunding platform. For example, Angel list and funding circle.


27.Term Sheet: A document that lists the basic terms and conditions associated with the investment in a startup or business. Once both the parties i.e. the business and the investors agree to the terms listed in the term sheet, a binding agreement is done between the parties to affirm the details of the term sheet.


28. Dry Powder: Dry powder is a slang term referring to marketable securities that are highly liquid and considered cash-like. Dry powder can also refer to cash reserves kept on hand by a company, venture capital firm, or individual to cover future obligations, purchase assets or make acquisitions. Securities considered to be dry powder could be Treasuries or other short-term fixed-income investments that can be liquidated on short notice in order to provide emergency funding or allow an investor to purchase assets.


29. CAC/LTV: Customer acquisition cost (CAC) refers to the resources and costs incurred to acquire an additional customer. Customer acquisition cost is a key business metric that is commonly used alongside the customer lifetime value (LTV) metric to measure the value generated by a new customer. It should generally include things like advertising costs, the salary of your marketers, the costs of your salespeople, etc., divided by the number of customers acquired. Customer Acquisition Cost = Cost of Sales and Marketing divided by the Number of New Customers Acquired.


Customer lifetime value is the metric that indicates the total revenue a business can reasonably expect from a single customer account. It considers a customer's revenue value and compares that number to the company's predicted customer lifespan.


30. Ticket size: The amount of money that goes into an investment transaction. A ‘$1m ticket’ means a $1m investment into a company. That doesn’t mean that the whole round is $1m - just that a particular firm is investing that amount into a round.





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