Startup Glossary: Essential Terms for Founders
The terminologies every startup founder and employee must know.
Introduction
In this guide, we’ve put together a list of important terms that every startup founder should know. These terms cover various aspects of the startup journey, from funding and development to marketing and strategic planning. Let’s dive in and make your startup journey a bit easier to navigate!
Funding and Investment 🚀
1. Bootstrapping: Self-funding your startup using personal savings, friends, or family.
2. Seed Round: The first round of funding from investors, usually for proof-of-concept or initial development.
3. Series A, B, C: Subsequent rounds of funding for established startups with proven traction.
4. Term Sheet: A preliminary agreement outlining the terms of an investment, subject to negotiation.
5. Valuation: The estimated market value of your startup, used for determining investment size and ownership splits.
6. ROI (Return on Investment): The expected financial return investors receive from their investment in your startup.
7. Bridge Loan: A short-term loan that helps a startup cover expenses between funding rounds.
8. Angel Investor: An individual who provides financial support to a startup in exchange for equity.
9. Venture Capital: A type of investment firm that provides funding to startups in exchange for equity.
Product and Development 🛠️
10. MVP (Minimum Viable Product): A basic version of your product launched to test market demand and gather feedback.
11. Pivot: A significant change in your business model or target market based on market feedback and learnings.
12. Unit Economics: The profitability of each individual unit of your product or service.
13. Intellectual Property (IP): Patents, copyrights, trademarks, and other legal protections for your innovation.
Customer and Marketing 🎯
14. CAC (Customer Acquisition Cost): The cost of acquiring a new customer through marketing and sales efforts.
15. CLTV (Customer Lifetime Value): The total revenue a customer generates for your business over their lifetime.
16. Churn Rate: The percentage of customers who stop using your product or service in a given period.
17. Growth Hacking: Creative and unconventional marketing strategies to achieve rapid user acquisition and growth.
18. Freemium: A business model that offers a free version of a product or service with limited features, while charging for premium features or services.
Financial Metrics and Operations 💰
19. Burn Rate: The rate at which your startup is spending its cash reserves.
20. Runway: The amount of time your startup has left to operate before running out of cash.
21. Equity: Ownership stake in your company, given to investors or team members in exchange for contributions.
Legal and Contracts 📜
22. NDA (Non-Disclosure Agreement): A legal contract to protect confidential information shared between parties.
Presentation and Communication 🗣️
23. Pitch Deck: A presentation deck used to pitch your startup to investors or partners.
Support and Resources 🛡️
24. Incubator: A program for early-stage startups that provides resources, mentorship, and support.
25. Accelerator: A program that provides startups with mentorship, funding, and network access.
26. Co-Working Space: A shared workspace where startups can collaborate and share resources.
Strategic Planning 🔍
27. Exit Strategy: The plan for how founders will eventually realize their investment in the startup, such as through an acquisition or IPO.
28. Acquisition: The process of taking over a startup or business by another company through the purchase of its shares or assets.
29. Acqui-Hired: The process of acquiring a startup primarily for its talent, rather than its product or service.
Miscellaneous 🌀
30. Cliff: A significant change in a startup’s financial situation, often related to the loss of a key customer or partner.
31. Crowdfunding: The process of raising funds for a startup by soliciting small contributions from a large number of people.
32. Hockey Stick: A graphical representation of a startup’s growth, showing a rapid increase in revenue or user base.
Conclusion 👋
Arming yourself with a robust understanding of these startup terms empowers you to navigate the entrepreneurial landscape with confidence. Whether you’re pitching to investors, refining your product strategy, or planning your exit, this glossary serves as a valuable reference for every stage of the startup journey. Stay informed, stay innovative, and may your startup journey be filled with success and growth!
