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New to the startup world or thinking of joining? If yes, then you’ve certainly heard some start-up exclusive terms that must be boggling your mind. If you want to sound like a total pro in this universe and want to acquaint yourself with all the cool lingo that gets thrown around here then read on. We present the startup dictionary to get you up-to-date with all the cool entrepreneurial terms.

A

Accelerator
– Where you begin. It is a centre where startups are ‘accelerated’ or ‘incubated’ through mentorship, advice, space and sometimes funds.

Accredited Investor
– A person legally proven to have money enough to invest in a venture. They have the potential to risk money in a startup in compliance with the law.

Acquisition
– It is when a company buys controlling stake in another company, through friendly (agreed upon) or hostile (not agreed upon) means.

Advertorials / Advertainment
– Pitching idea to attract traffic using paid content. These are made to look like a real story or blog post.

Angel investor
– Basically, the first person to invest in a venture. They provide the starting amount in the infancy of the company preceding a Seed round. They are usually close friends or kin.

B

Benchmark
– A process to measure the success of the company. It is basically the achievement of a set goal in a determined amount of time.

Bleeding Edge
– A very pretentious way of conveying that the venture is on the vanguard and has a fresh, new idea as the base.

Boot-Strapping
– It means pulling yourself up on funds from your personal resources or from your friends and family. It has evolved from the phrase "pulling oneself up by one's bootstraps." It is a tightly run ship and no splurging is allowed and usually happens in the infancy stage.

Board of directors
– A group of individuals chosen to oversee the affairs of the company. It typically includes investors and mentors.

Bridge loan
– Also known as ‘swing loan’, it is a short-term loan to bridge the gap between financing rounds.

Buyout
– A common exit strategy where the company’s shares are sold for interest in the company.

B-to-B = Business to Business
– One company selling its product to another.

B-to-C = Business to Consumer
– A company selling its product to the masses.

Burn Rate (aka Run Rate)
– The rate at which a start-up burns through the cash.

C

Capital
– Monetary asset raised and available for use.

Capped notes
– Placing a ‘cap’ on investor notes in a funding round. It is a cap on the valuation of the company when notes turn to equity and lets the investor own a certain percentage of a company when it raises another round of funding.

Convertible debt
– It is a process of borrowing money in the early stages with the intent that the debt accrued will later be converted to equity in the company at a later valuation.

Cliff
– These are shares given to employees over a fixed period of time. It usually applies to vesting schedules. They are a way to fire employees or let them leave without giving them stock within a limited period of time (usually 1 year).

D

Debt financing
– The process of raising funds by selling bonds, bills, notes to an investor promising to repay the debt later with interest.

Deck (aka Pitch Deck)
– it is a pitching strategy comprising a power point presentation that covers all aspects of your venture in a concise and attractive way. This is what you present to the investor to convince them to invest in your venture.

Disruptive Technology
– Something new that changes completely the way something is done. For example, Amazon changed the way people shop by presenting them with the option of online shopping.

Due diligence
– An investigation of facts and figures made by a potential investor about the venture before agreeing to fund.

E

Entrepreneur
– An individual who starts a business venture, assuming to bear all the potential risks or rewards involved by himself or herself.

Entrepreneur in residence (EIR)
– A seasoned entrepreneur employed by a VC firm guide them in the investing process and to mentor the firm's portfolio companies.

Equity financing
– The process of raising capital by selling shares of the company. An IPO is a form of equity financing.

Exit strategy
– This is how everyone gets rich. It is the method by which the entrepreneur and/or investor are able to get returns on their investment in the company. The most common options are an IPO and a buyout from another company.

F

FMA = First Mover Advantage
– It is when you are first to the market and have a unique product. It has its pros and cons as you might have to educate your market as you go and thus it might not be as profitable in the beginning.

Freemium
– It is a marketing strategy where you give away the basic product for free and start charging for later features. This is true of most gaming apps.

Source - Google Images

Fund of funds
– It is a mutual fund that invests in other mutual funds.

G

Gamify
– This is again a strategy to attract traffic by adding a gaming experience. The promised rewards help keep the customers coming back for more.

Ground floor
– The earliest point of a venture. It is advantageous to invest at this stage.

Growth Hacking
– A marketing technique that employs the use of non-conventional and inexpensive techniques in order to grow.

H

Hockey Stick
– The desirable growth curve VCs want to see. It implies that the startup doubles sales every year.

I

Incubator
– An organization that helps the early stage companies to develop, usually in exchange for equity.

IP = Intellectual Property
– A patent that gives you exclusivity privilege over your product so that no one else can use it or pass it on as their own.

IPO = Initial Public Offering
– It is the first time that shares of a company are offered on a securities exchange or to the general public. A venture ceases to be a start-up at this point and becomes a public company.

Iterate
– Trial and error in the startup world.

L

Lead investor
– The firm or investor that organizes a specific round of company. They also usually invest the most in that round.

Leveraged buyout
­– It is when a company is bought with a combination of equity and borrowed money. This revenue is used to pay back the borrowed capital.

Liquidation
– The process of dissolving a company by selling its assets, that is, liquidating them. Read more on liquidation.

Loss Leader Pricing
– Making a deal at a loss in order to rope in long term partners for future business.

Low Hanging Fruit
– It is the easiest thing a company can do to bring in profit. But, usually this crucial thing for the venture is hard to identify.

Source - Google Images

M

Market Penetration
– It is something all VCs want to know. This refers to how much potential market a venture is capturing and at what rate.

Mezzanine financing
– It is a hybrid financing which comes into play in later stages of a startup. It is a type of debt financing, which also includes embedded equity instruments or options. Companies at this level are no somewhere in between being a startup and a public venture, and are referred to as ‘mezzanine level’ companies.

Monetize
– The plan of action for making money.

MVP = Minimum Viable Product
– This is the most basic version of the product required for proof of concept. This is the basis of the new software or product which will be Beta tested and later upgraded.

N

NDA = Non-disclosure agreement
– This is an agreement between the parties involved to protect sensitive information, such as trade secrets, from being shared with others.

P

Pivot
– This is the change in the direction of a company with reference to business strategy. It could be used to enter a different market segment or using an established technology for an entirely new purpose.

Source - Google Images

Portfolio company
– A company that a specific VC firm has invested in.

Preferred stock
– A stock that gives the holder preference in the payment process. In case of liquidation, the holder of this kind of stock is paid before all else.

Proof of concept
– A proof as to the feasibility or potential of the concept. This is need to convince VCs to invest.

Pro rata rights
– Also known as supra pro rata rights, these give a VC the option of increasing his or her ownership of a company in later rounds of funding.

Pre-Money Valuation
– An expected valuation provided by the entrepreneur.

Post-Money Valuation
– A valuation agreed upon between the entrepreneur/s and the VC with the addition of some cash.

R

Ramen Profitable
– Basic level of profitability only enough to cover the basic costs and living expenses of people working at a startup.

ROI = Return on Investment
– The expected return on the investment put in by the investors. It can also be described in relation to smaller segments, like results of a particular marketing campaign’s success.

Recapitalization
– A process of reorganization of a company’s capital structure, changing the mix of equity and debt. It is usually done to prepare for exits, lower taxes or takeovers.

Round
– These are the stages of raising funding, by the startups, from VC firms. Seed round is usually the first round followed by Series A, B and C rounds and so on.

Runway
– The time period a venture has before the cash runs out and they have to close shop.

S

SaaS = Software as a Service
– Selling subscriptions to use a software, as a service. It is usually hosted remotely, mostly over the internet.

Scaleable
– Something with potential of growth as the market and demand is big enough.

Sector
– The market that a startup company’s product or service fits into.

Seed
– The first official round of startup funding. This is the first stage where the startups raise funds by proof of concept and are referred to as ‘seed stage’ companies.

Series
– The specific round of funding is called series.

Startup
– There is no proper definition of a startup. It is a venture in the early stages of operations seeking to solve a problem or fill a need.

Sweat Equity
– These are mostly the shares of a company given in return for work done. It can also be used as a recruitment tactic for startups in initial phases when they can’t afford to pay much.

T

Term Sheet
– It is an agreement that lays down the major aspects of agreements between the founders and the VC. It sets the groundwork for building all legal relations.

Traction
– Traction is proof that people are actually, usually in numbers, that people are actually interested in buying the product. These numbers help in pitching to VCs.

V

Valuation
– A process to determine a company’s worth. ‘Pre-money’ and ‘Post-money’ valuation come under this.

Value Prop
– The features or elements that make a business unique and attractive.

VC = Venture Capital or Venture Capitalist
– Firms that invest in startups ventures.

Vesting
– It is when an employee gains rights to stock options. This matures over time until it reaches full value after a predetermined period of time. It can used as an incentive to make the employee work harder and to make them stay with the company for a longer period of time.

For more such terms to break yourself into the startup world, refer to this all-inclusive list by Forbes.

We hope you liked the above list and find these terms of use. Let us know in the comments below if there was any we missed or any term you’d like us to explain further.