A/B testing – Using A/B testing, a business can release two pieces of online content — like a marketing email, blog post or Web page — to two different test groups and see which version receives the most engagement. This kind of testing helps narrow down marketing and advertising avenues, and predict which option will be more successful with the general public.
Accelerator — A program designed to accelerate the launch or growth of startups, whether it be through mentorship, workshops, office space or funding. The startups ‘graduate’ at the end of the program at which point they are geared to gaining full-blown investment, with each program culminating in a focal ‘demo day’ for investors.
Accredited Investor – 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.
Acquisition – Taking ownership of another business. Frequently used in conjunction with the word merger, as in mergers and acquisitions or M&As.
Advertising – The activity of attracting public attention to a product or business, as by paid announcements in the print, broadcast, or electronic media. Not to be confused with marketing or public relations.
Advertorials / Advertainment – Paid content that is meant to look and feel like a real story or blog post. 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.
Angel Investors – An independent individual who invests his or her own capital in emerging entrepreneurial ventures for an equity ownership interest, usually as a bridge to get from the self-funded stage to the level of business that would both need and attract venture capital. Funding level ranges anywhere from $50,000 to $2 million. Compared to Venture Capitalists, angel investors tend to invest fewer dollars
API – Application Programming Interface. Helps different components of software work together so that they all seem to operate as a single software. Such interfaces are very common and help coordinate numerous “moving parts” to make a program or app easy to use.
Appraisal – A formal estimate of the value of something on the open market. It also describes how the estimation and conclusion of value was made.
B-to-B – Business to Business which means your startup business model is to sell products or services to other companies.
B-to-C – Business to Consumer. Your company sells stuff direct to the public / consumer.
Back end – What you see when you click on a Web page is the front end. The back end is everything else behind the scenes of that page, like Web servers, databases or applications that make the page work. When developing your website, what is in the back end can have an effect on what search engines see.
Barter – Direct exchange of merchandise and/or services between businesses.
Boot–Strapping – Also known as self-funding. Starting a business with your own money. Such startups fund the development of their company without the help of venture capital firms or angel investment. They need to be very cautious with their expenses and most likely will not be proﬁtable at ﬁrst.
Burn Rate (aka Run Rate) – How fast you are spending your cash.
BI – Business intelligence software, the information a business collects about itself. This can include a very broad swath of data, which is why businesses often need business intelligence software. These programs let companies keep all their BI data in one place so that it is easier to access and analyze.
Business Valuation – An estimate of the worth of a business entity and its assets.
Churn Rate – Customers lost after acquisition in a subscription-based business model. Because of the churn rate, your growth might not look like you think it will.
Cliff – 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.
Cloud Hosting – Data to be stored on virtual servers accessed only with an Internet connection.
Co-working Space – The use of an office or other working environment by people who are self-employed or working for different employers, typically so as to share equipment, ideas, and knowledge.
Consumer Direct Marketing – A form of Network Marketing in which the distributors are all also consumers, i.e., they must also buy the product for their personal use.
Consumability – How easily information can be accessed, consumed, and retained. To learn more about this, visit StartupIndustries.com
Content curation – Creating content to share online.
CMS – Content management systems. Used to manage the content of a website.
Copyright – Copyright is a form of protection for published and unpublished literary, scientific and artistic works that have been fixed in a tangible or material form.
Corporation – A body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members. The primary advantage of a corporation is that shield its investors from personal liability for any losses the corporation may experience.
Cottage Business/ Cottage Industry – A nice business but not something massively scalable. If you have one, you’re not a good fit for VC.
CRM – Customer Relationship Management Software. the way a business collects and manages data about its clients, such as service calls made or previous products purchased. This helps businesses close future deals and grow relationships with customers.
Data center – A data center is a facility that houses computer and data-storage systems, including servers.
Disrupt / Disruptive Technology – Something that completely changes the way society does something (e.g. Uber/Lyft vs. Taxis or Amazon vs. in-store shopping). Game changing.
DNS – Domain name service. Every domain name is translated into numbers as an IP address when it is entered into a browser’s address bar. The DNS is a directory of those numbers.
Downline – In a Multi-Level Marketing business, the collection of all people signed underneath an individual on which the individual receives payment on their sales.
Dragon – While a ‘unicorn’ denotes an unlisted company that has achieved a valuation of over $1 billion based on funds raised, a ‘dragon’ is one that raises $1 billion from investors in a single round.
Due Diligence – The inquiry process of obtaining sufficient and accurate disclosure of all material documents and other information which may influence the outcome of the transaction.
Email marketing – Email marketing is the promotion of products and services via email. Businesses can get creative with their emails by including images, videos and other exciting content that customers will be more likely to view. Many businesses use email marketing software to manage distribution lists, campaigns and analytics.
Engagement – Knowing how many people use your online resources and how often people interact with your social media efforts is called tracking engagement. The more engaged your audience is on social media or your website, the more you know your message is being heard and resonating.
Entrepreneur – An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.”
ERP – Enterprise Resource Planning software allows a company to manage various aspects of a business — such as accounting, inventory and human relations — in one place.
Exit Strategy – The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of “cashing out” an investment. How you will sell the company and make your investors money. Who is going to buy you and why?
FMA (First Mover Advantage) – Being the first to market with a product or service. Being first typically enables a company to establish strong brand recognition and customer loyalty before competitors enter the arena. There are disadvantages to being First Mover. For instance, you may have to educate investors about this new, untapped market. Convincing investors to put money into a market which does not have clear established demand can be tough.
Freemium – You give the basic product away for free and then try to upsell features to your customers.
Gamify / Gamification – Adding a game layer to a website or product experience that encourages people to use it with rewards of various kinds. People love games.
Growth Hacking – A marketing technique that focuses on quickly finding scalable growth through non-traditional and inexpensive tactics such as the use of social media. A process of searching for the right trick or ‘hack’ that allows for accelerated and accumulative growth.
Hockey Stick – Also referred to as an “inflection point,” this refers to a period of rapid growth (in revenue, sales, etc.) that, when graphed, resembles the shape of a hockey stick.
Impressions – Each time a piece of your social media content is seen.
Incubator / Startup Incubator – A collaborative program that provides resources, shared office space, and guidance through the first year or so of a business’s launch into the market.
Intrapreneur – An intrapreneur is one who takes on entrepreneur-like ventures within a large corporate environment.
IP – Intellectual Property. This can be a patent or a secret sauce or formula like Coke.
Iterate – To try something, get it wrong, and try it again in a slightly different way with the hopes of achieving a better result.
Joint Venture – A legal entity created by two or more businesses joining together to conduct a specific business enterprise with both parties sharing profits and losses.
Launch – To start a company or push a website live.
Lean Startup – Similar to Growth Hacking. The core mission of a lean start-up is to prove the business concept as quickly and cheaply as possible.
LMS – Learning management systems are used by businesses for training employees. Such systems help human resource departments plan, implement and assess the training process. Video conferencing, discussion forums and other interactive features are usually included within a learning management system’s software.
Leverage – To use something such as technology, partnerships, etc. to your advantage.
LLC – Limited Liability Company. A legal entity that is not taxable itself and distributes the profits to its owners, but shields personal assets from business debt like a corporation.
Limited Partnership – A business arrangement in which the day-to-day operations are controlled by one or more general partners and funded by limited or silent partners who are legally responsible for losses based on the amount of their investment.
Line of Credit – Similar to a business loan, except that the borrower only pays interest on the amount actually used. Much like a credit card, the business makes periodic payments against the outstanding balance.
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. Crucial for startup success.
Market Penetration – the percentage of the potential market you’re hoping to or have captured. VCs will also want to know how fast you can capture it.
Merchant Account – Merchant accounts are agreements with banking institutions necessary for businesses accepting credit and debit card transactions. In exchange for converting credit card payments into cash, banks charge merchants an interchange fee as well as other fees.
Merger – When two separate business entities combine into one. Mergers typically result in the new company having a competitive advantage the individual companies could not have independently obtained.
MVP – Minimum viable product. The simplest functional iteration of a product that will be improved upon as the company generates funds. The objective is to learn a lesson specific to your product/service with minimum effort/cost and begin to understand the difference between value and waste.
Monetize – How you are, or intend to, making money.
Multi-level Marketing (MLM) – Also known as Network Marketing. A business in which a person receives proceeds not only from their own sales, but from the sales made by people under them. MLM’s business involve a distributor network that is required to build the business.
Open source – Describes code that is available publicly and that anyone can use. People can take it and modify it for their own individual or collaborative purposes.
Organic – Content that individuals have viewed because they came to it through their own natural or “organic” keyword searches instead of through paid promotions.
Outsourcing – A business practice in which a company hires another company or an individual to perform tasks, handle operations or provide services that are either usually executed or had previously been done by the company’s own employees.
Partnership – A business entity in which two or more individuals share in the administration, profits and losses of the operation. A partnership is legally regarded as a group of individuals rather than as a single entity, and each of the partners file their share of the profits on their individual tax returns.
Patent – A property right granted to an inventor to exclude others from making, using, offering for sale, or selling the invention for a limited time in exchange for public disclosure of the invention when the patent is granted.
Pitch Deck – A 10-slide power point presentation that covers all aspects of your business in a concise and compelling way. The pitch deck should create maximum impact.
Pivot – 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.
Pre–Money – The value VCs place on a company’s stock prior to investing. Post-money is then the pre-money valuation plus the amount invested.
Pre-seed Investment – The first investment a startup receives, generally it is done by an angel investor, but can also be done by incubators and accelerators.
Responsive Design – A site built for optimal viewing of a website across all devices.
ROI – 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.
Runway – How long you have until you spend your current cash based on your current burn rate.
SaaS – Software As A Service. Selling software to consumers.
Scalable – Something that can grow to a large size because the market and demand is big enough. Scaling refers to the period in a startup’s life when they accelerate growth based on positive measurable results.
SCORE – the Service Corps of Retired Executives provide business advice for small businesses. See www.score.org.
Seed Round – First round of venture capital funding for a business venture. This is for the development stage, just past the angel round, and can be up to $1 million of capital. Subsequent rounds are referred to in terms of Series (Series A, B, C, D, E) or stages (startup stage, formative stage, mezzanine stage).
SBA – Small Business Administration. The United States Government Agency charged with “providing customer-oriented, full-service programs and accurate, timely information to the entrepreneurial community”. See www.sba.gov.
Sole Proprietorship – A business owned and operated by one person.
Space – Referring to a market or industry, and often saved for new emerging segments of a market. Example: “We’re focused on the social commerce space.”
Startup – Refers to a company in the first stage of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is a demand.
Startup Metrics – Provides key insights into the business that would make the difference between success and failure. Metrics are also used to demonstrate traction to your startup, some people call this key metric a key performance indicator, or KPI. Usually, there is a financial component to this key metric.
Strategic Alliance – An ongoing relationship between two businesses in which they combine efforts for a specific purpose.
Sweat Equity – Shares of a company given in exchange for work done. Often used as a recruiting tool to help you attract passionate talent you can’t afford to pay at market rates.
Term Sheet – A document that outlines what Investors will get for what they put in, including percent ownership and voting rights.
Traction – Proof that people are actually buying and using your product / service.
Trademark – A form of legal protection for words, names, symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike patents, can be renewed forever as long as they are being used in business.
Unicorn – Denotes a startup company that has risen to a $1 billion valuation or higher. The reason behind the naming is because the billion-dollar startup was once considered a myth.
Valuation – 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 amount of money a company is worth.
Value Prop / Proposition – The feature(s) or elements that make your business or product uniquely attractive to consumers.
Vaporware – A product you are selling but have not actually made (and may never make). It is a way to test market demand.
VC – Venture Capital. Money provided by investors to startup firms as well as small businesses with perceived long-term growth potential. It typically entails high risk for the investor, but it has the potential for above-average returns.
Vesting Period – A period of time an investor holding a right to a company must wait until they are able to fully exercise their rights.
VPN – A virtual private network. Allows users to connect to a private network from anywhere for added security. For instance, instead of using the public network at a local coffee shop or hotel room, which comes with a heightened security risk, employees can connect to your VPN with the same security as if they were in the office.
Web App – This is a Web page that looks and acts like an app on a smartphone or tablet. Web apps provide viewers with a familiar format and more intuitive navigation and are immediately mobile friendly.
100 Startup Terms Every Entrepreneur Should Know
There's nothing worse than being in conversation and not having a clue what everyone is talking about! Here are 100 startup terms every entrepreneur should learn before their next networking event!