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Getting Acquainted with Startup Jargon

A decade ago, a lot of these words would ring differently. Today, they’re some of the most used startup jargon by industry insiders and consumers alike. Much like science, a variety of these words are birthed from the evolving nature of business practices and trends.

Since you’re bound to come across many of these terminologies sooner or later, here’s a quick roundup of what they mean:

Entrepreneurs

For this guide, the words “founder” and “entrepreneur” refer to the same kind of individuals, hence the convenient interchanging. Both words talk about people who start and manage enterprises.

Accelerator

You would think this word is related to traffic and driving, but in the startup context, an accelerator is a program or a body of experts that extends mentorship and resources to aid in the expansion of small businesses.

Angel investment

This investment type is given during a startup’s earlier stages. An angel investor is one who extends capital for a business, usually in exchange for ownership equity or convertible debt. A prime example of this is Jeff Bezos, Amazon CEO.

Benchmark

A performance objective used to measure how successful the run of a business period is. For instance, the benchmark of how successful a social media post is can be its number of likes, comments, and shares.

Bootstrap

Arguably the opposite of having an angel investor, bootstrapping refers to entrepreneurs who use their personal resources to found a startup. Self-funding can come in the form of borrowing money from friends and family or using one’s personal savings.

Burn rate

As the term implies, this refers to how quickly you’re spending your funds. When someone asks what your burn rate is, typical answers involve how much you would generally spend in a month in the context of your budget calendar.

Exit

Not straying far from its original meaning, exit refers to a founder’s exit strategy when passing on their company to another entrepreneur. Exits are usually established to come up with a payment scheme to repay investors.

Incubator

Whereas accelerators help foster the growth of startups in its initial stages, an incubator helps grow young firms which are typically a few months to a few years old only. Incubators help out young businesses, mostly in exchange for equity.

Lean startup

A startup strategy used to validate a business idea affordably and quickly.

MVP (Minimum viable product)

A product that carries only the most essential features of an idea to test how it initially fares in the market. For example, before Amazon became the ecommerce empire it is today, it used only to connect interested buyers to book publishers. When the idea thrived, more product categories became available on the platform.

Pitch deck

A pitch deck is a summarised version of a marketing plan designed to be presented in front of investors to get them to fund a startup.

Pivot

Similar to how it’s defined in physics, pivot refers to when entrepreneurs change market segments, after previously targeting another audience.

Runway

This is the computation of how much time and funding a startup has as it functions while in the red. For instance, if a company spends 15k a month, and it has 165k in the bank, then its runway is 11 months.

Seed Round

A seed round refers to a startup or business stage where entrepreneurs gather funding outside of their personal resources. If a startup begins by bootstrapping 100k, for example, and it needs an extra 30k for something, they can choose to look for a seed round.

Scale

The quickest definition of this word is to either expand or contract. When a startup scales up, it means they’re expanding either in talent number or product categories. If a startup scales down, that means they’re downsizing.

Startup

Usually referred to as profitable small businesses under three years old, startups are also known to be innovative forms of organisations that don’t pack strict corporate office practices.

Unicorn

Companies in the tech industry that are worth $1B or more. A few examples of Unicorns are SpaceX, Instagram, Pinterest, Shopify and WeWork.

VC (Venture Capital)

Venture Capitals are very much like regular capitals only they are a financing type investors extend to enterprises that are deemed to have promising monetary potential. VCs are also a form of private equity.

Overall, there are many words investors and business leaders throw around now and then, and you can only bet these words are bound to evolve, diversify, and increase. With various metaphors and idioms trending by the day, one can only expect startup language to be broader and more dynamic.

What other startup jargon do you think we should include on our list? Let us know by commenting!

Do you have startup ideas you’d like to discuss? Give us a call, and we’ll make it happen!

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