For those newly initiated into the startup world, the jargon can seem impenetrable at first...

In the glossary below, I have compiled a list of the most importance pieces of startup business jargon that you need to know.

Accelerator/Incubator

• a centre providing office space, mentorship, networking and sometimes funding to startup companies 

Advertorials / Advertainment

• an advertisement ‘disguised’ by editorial formatting.

Amortisation

• the paying off of debt following a fixed schedule over time.

Angel Investor - a high net worth individual looking to invest in early stage startups and potentially to offer mentorship.

Bleeding Edge - the front rank of technology development

Boot-Strapping - developing your business as cost efficiently as possible by stripping away any superfluous or profligate purchases.

B2B Business

• Your company sells services/products to other companies.

B2C Business

• Your company sells products/services to consumers.

Burn/Run Rate - the rate at which you are using up your cash. Startups frequently take several years before breaking even or making a profit.

Churn Rate - The rate at which customers are lost subsequent to acquisition in a subscription-based business model. Churn rate will affect growth.

Cliff - people who have been promised shares do not receive any until they have stayed at the company for the duration (usually a year) of the cliff. (See ebook)

Cost per Action (CPA) - an online advertising pricing model where the advertiser pays for each specified action e.g per click or per form-submit. See also PPA/C and CPC.

Cost per Acquisition (CPA) - the cost of converting a visitor to a client.

Cost per Conversion (CPC)- same as CPA.

Cottage Business/ Cottage Industry – a nice business but one that is unlikely to scale.

Customer Lifetime Value (CLV) - the amount of money earned from a customer over the entire duration of the relationship.

Customer Relationship Management (CRM) - a way of managing a company’s interactions with present and future customers.

Debt - money that is owed.

Dilution

• the reduction of percentage ownership caused by the issuing of new shares.

Disruptive Technology - Tech that revolutionises the way we operate as a society. E.g. Uber and the tax industry.

EBITDA

• is earnings before interest, taxes, depreciation and amortisation. It is a good way to compare profitability between companies as it removes the effects of financing and accounting decisions.

Equity - the value of shares issued by a company.

Exit Strategy

• your plan to sell your company and fill your investors’ coffers. You need to show some of idea of who is going to buy you and why.

FMA

• First Mover Advantage. You cannot always be the first of your type of company to market but if you are, it is vital to point this out to your investors. N.B. this can be an advantage and a disadvantage as you may have to educate your market which will increase the cost of customer acquisition.

Freemium - a sales and marketing strategy whereby you give the main product away for free and monetise by upselling features from it.

Gamify

• Adding a game facets like ‘levelling up’ or ‘percentage progress’ to a website or product experience that encourages people to engage.

Growth Hacking - Sean Ellis’ term to describe a marketing strategy that quickly and inexpensively grows a company using untraditional methods.

Hockey Stick - When you show your growth projection graph to investors it should look like a hockey stick; and, crucially, it must be believable.

Intellectual Property (IP) - Not every startup has or needs IP like a patent or a secret formula; but if yours does, then make sure it is protected. Investors are not interested in ideas that can be stolen.

IPO

• Initial Public Offering. Where shares in your company are offered for public sale which leads to a stock market listing called flotation.

Iterate - try something, measure the results and try again until the process is optimized.

KPI - key progress/performance indicator. Traction information that can help justify your valuation.

Launch - to start a company or website.

Lean Startup - a philosophy of starting and proving a concept as quickly and cheaply as possibly using methods like Growth Hacking.

Leverage - to use something to your advantage.

Loss Leader Pricing - the method of selling your product at a loss in order to generate more customers.

Low Hanging Fruit

• the easiest thing you can do to generate money.

Market Penetration - investors want to know how quickly and how you intend to enter your market; and how much of it you predict capturing.

Monetize - how is your product/service going to make money.

Minimum Viable Product (MVP) - the cheapest product you can produce to achieve proof of its concept. A good way of reducing risk and testing your potential market fit.

Pay per Action/Click (PPA/C)

• same as CPA.

Pitch Deck

• An 11-slide power point presentation that covers the essentials of your business in a concise and engaging way. 

Pivot - to alter the direction of your product/service to suit market conditions or to change markets/purpose entirely.

Ramen Profitable - breaking even enough to cover the costs of running the business including salaries.

Responsive Design - a site able to be viewed at its best across all devices.

Return On Investment (ROI) - the expected rewards of any investment.

Runway - the time left until the money runs out.

Search Engine Optimisation (SEO) - maximising the visibility of your site on organic internet searches.

Software As A Service (SaaS) - you use a subscription model to sell your software.

Scaleable - a company able to grow to a large size because there is sufficient market space and demand.

Sweat Equity - shares given for labour rather than cash- a good recruiting tool. 

Term Sheet

• the document setting out what investors will get for their contribution e.g. percentage ownership and voting rights.

Traction – validation for the desirability of your product/service.

Valuation - the estimated value of your company. Pre-money is the value before investment. Post-money is the pre-money valuation plus the funds raised.

Value Proposition - a statement that clearly lays out what you do uniquely well, how you do it and for whom it is beneficial.

Vaporware - a product you pretend to sell but may never actually make; a clever way of testing market demand.

Venture Capitalist (VC) - They have cash to invest.

Vesting

• a method of releasing promised shares over a period of time. (Pre-Funding article iii. How to set up your company).