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Are terms like crowdfunding, design thinking, and product-market fit unfamiliar to you? Are you a startup founder or just about to venture into the business world? Do you often pretend to understand conversations with colleagues, partners, or investors?
The startup world uses a lot of jargon and foreign expressions in everyday activities. As a startup founder, it is crucial to know what you are talking about, especially when communicating with investors who might be interested in investing in your business.
That’s why we have set up a startup dictionary with over 50 important terms. This guide will give you a better understanding of startup language.
Startup dictionary
Agile Project Management
A project management methodology that allows flexibility in scope, resources, and products. The agile approach implies adaptability to frequent changes.
Accelerator
A cohort-based program for scaling startups where developing companies receive mentorship, investment, and knowledge to help them grow quickly. In return, accelerators often take equity in the company.
Angel Investor
A private investor who invests personal money in the early stages of a startup, often in exchange for equity. Unlike venture capital funds, angel investors typically invest smaller amounts.
Acquisition
The process by which one company or investment group purchases another company.
B2B (business-to-business)
This acronym describes a business model where the customer segment is another legal entity (company) that purchases a product or uses a service.
B2C (business-to-consumer)
This acronym describes a company’s business model oriented towards consumers to whom the company sells its products or services.
Black Swan Event
An unpredictable, extremely negative event or circumstance that is impossible to foresee. Examples include crises like the 2008 financial crisis, wars, natural disasters, and other catastrophes.
Bootstrapping
A method of developing a startup where companies choose to grow organically and independently rather than using external investor funds. It involves keeping costs low and using personal investments and/or revenues to fuel the company’s growth.
Business model
A business model that describes how an organization creates, delivers, and captures value in the form of revenue. It consists of nine parts: customer segment, value, distribution channels, customer relationships, costs, key activities, key resources, and partners.
CAC (Customer acquisition cost)
The cost of acquiring a new customer, including all marketing and sales costs divided by the number of new customers over a given period.
CLV (Customer Lifetime Value)
The total value a customer generates for the company over the course of their relationship with the company.
Creative-tech
Short for Creative Technology, it signifies a new approach to using design and technology. This formulation of industry, company, or project arises from the interaction of technology, art, design, and behavioral and emotional knowledge to create unique user experiences.
Crowdfunding
Collecting funds for a project or venture through small investments from a large number of people via crowdfunding platforms like Crowdcube, Seedrs, or Kickstarter.
Convertible Note (Loan)
A financial instrument often used in the early stages of startup funding. It is a loan that can later be converted into equity in the company when a certain funding level is reached.
Crowdsourcing
Procuring resources for the realization of a project or idea from a large number of users via the internet.
Demo day
An event where startups that have gone through incubation, pre-acceleration, or acceleration present their startups to expert panels and/or interested investors. At Smion, as part of the program we run, we organize a demo day.
Deck/Pitch deck
A short presentation that concisely and excitingly covers all aspects of your business.
Design Thinking
A method for creating innovative products, organizational solutions, and developing an innovation culture. It helps organizations become and remain agile and innovative like a startup. The design thinking process has five key steps: empathizing with the user, defining the problem, ideating, prototyping, and testing in real conditions.
Digital Nomad
An employee or entrepreneur who uses digital technologies to perform their work and is therefore flexible regarding the location of their work.
Disruptive Technology
An innovation or technology that creates a disruption in the existing market by redefining the value offered to customers.
Daily Scrum (Daily Stand-up Meeting)
A 15-minute time-boxed event that helps the team synchronize activities and create a plan for the next 24 hours. This is done by reviewing work since the previous daily Scrum, assessing tasks to be completed before the next meeting, and discussing any potential obstacles.
Social Entrepreneurship
Applying business strategies to maximize financial, social, and environmental benefits. Eco-entrepreneurship or ecopreneurship represents finding business opportunities that simultaneously restore the environment and generate profits.
Evangelist
A person from an organization who will often go above and beyond to promote it, someone who serves to promote a startup.
Elevator Pitch
A short and compelling presentation of your business or product. The idea is to introduce the value of your company or product to someone in a short time frame (20-30 seconds), as long as it takes to reach their floor in an elevator.
Equity
Ownership share in a company, which gives the right to participate in profits and influence decision-making.
Exit
The sale of an ownership share in a company. An “exit” can be achieved in several ways: through an initial public offering (IPO), selling ownership shares to another company or individual, or selling the entire company.
Freemium Approach
A revenue model where the basic product is offered for free, and additional features are sold to customers. It is a common and proven technique for acquiring a larger number of users for SaaS startups.
Growth Hacking
Marketing techniques focused on quickly finding scalable growth through non-traditional advertising methods.
Hackathon
One-day or multi-day events organized to develop software solutions to a specific problem.
Incubator
A support system for early-stage companies offering guidance, training, and workspaces.
Intellectual Property (IP)
Rights to innovations, including patents, copyrights, trademarks, and trade secrets.
IPO (Initial Public Offering)
The process by which a private company sells its shares to the public for the first time via the stock market.
Exit Strategy
A strategic plan for selling a company to an investor or another company, where the business ceases to be an independent private venture.
Unicorn
A private technology company valued at over a billion dollars. The name comes from its mythical rarity.
Key Performance Indicators (KPI)
Measurable values that show how successfully a company achieves its key business goals.
User experience (UX)
The process of increasing customer satisfaction with a product by improving its usability, accessibility, and satisfaction in interaction with the product.
User Interface (UI)
The interface between the user and the computer system.
Lean Canvas
A version of the business model designed specifically for startups, allowing for quick testing and iteration of business ideas.
Lean startup
A methodology inspired by the lean manufacturing systems of Japanese production, popularized by Eric Ries. The lean startup framework focuses on building a company or product by shortening the product development cycle and discovering the sustainability of the business model. This is achieved by eliminating waste in the development process through early user involvement and rapid iterations.
Low hanging fruit
A term used for simple and easily solvable tasks that contribute to success or progress.
Minimum Viable Product (MVP)
One of the key principles of the lean startup is the Minimum Viable Product (MVP), which represents the simplest version of your product vision that meets the basic needs of your first users. The MVP is the version of the product that provides the team with the maximum amount of learning about customers with the least investment of resources.
Monetization
The process of generating revenue from assets, operations, etc.
Cash Flow
Cash flow is the net amount of money and cash equivalents flowing into or out of a business. There is positive cash flow (more money coming in than going out) and negative cash flow (more money going out than coming in). A company’s cash flow position determines whether the inflow can cover the outflow, indicating whether the business faces a potential existential problem.
Pivot
A significant change in the direction of a startup’s value proposition while maintaining the same long-term vision.
Value Proposition
The key characteristics and benefits that make your target customer want to buy and use your product or service.
Problem solution fit
A stage of startup development where it is validated that a problem exists and that the proposed solution fits the problem.
Valuation
The process of determining a company’s value. An analyst will consider factors such as capital structure, the management team, and revenue or potential revenue.
Product market fit
A stage in startup development where it is confirmed that the startup has a sustainable business model and is ready to scale. It means having a good product that meets the needs of a suitable market.
Early Adopters
Early adopters are the first users of your product or service. They are usually individuals eager to embrace innovation to solve their problems. They provide honest and direct feedback, crucial for product development, and often promote your product within their networks.
Customer Development
A framework for building a startup focused on discovering, validating, creating, and expanding a business model. It runs parallel to product development, the traditional way of developing new products.
RPA: Robotic Process Automation
A method of automating business processes to improve operations by reducing costs, preventing errors, and speeding up processes. RPA is implemented by integrating RPA robots into regular business workflows.
Runway
The amount of time a startup can operate before running out of money. This applies to startups that are not yet profitable and rely on investments or financial reserves to fund operations. Monthly expenses are collectively referred to as the “Burn rate.” For example, if you’re spending $10,000 monthly and have $60,000 in the bank, you have a six-month runway before depleting your financial resources.
SaaS (Software as a Service)
A revenue model for licensing and delivering software, where the software is licensed on a subscription basis. Unlike traditional software sold as a perpetual license, SaaS providers charge for the software through a subscription, typically on a monthly or yearly basis, which covers hosting, maintenance, updates, and customer support.
Serial Entrepreneur
Someone who launches a series of businesses and projects, either simultaneously or one after another.
Seed Funding
The initial stage of startup financing, typically used for market research, developing a minimum viable product (MVP), and gathering user feedback.
Scaling
The exponential growth phase of a startup, where the company’s revenues significantly outpace its costs.
Merger
The process of combining two companies into one entity.
Sprint
The core of Scrum, a time-limited period during which a completed, usable, and potentially shippable product increment is produced. Sprints are of consistent duration throughout the product development process, with each new sprint starting immediately after the previous one. A sprint consists of sprint planning, daily Scrum, development, sprint review, and sprint retrospective.
Startup
A company in its early stages of operation that is searching for a business model. Startups usually aim to solve a problem, meet a need, or satisfy a user’s desire through innovation and new technologies. A company remains a startup until it finds a sustainable business model.
Startup Ecosystem
Entrepreneurs, talents, startups, scale-ups, corporations, investors, support organizations, and academic institutions operate in a sector where their interactions lead to the creation and growth of new companies. The startup ecosystem thrives with as many stakeholders as possible in the same physical or virtual space.
Startup Drill
The process of developing an entrepreneurial idea consists of defining assumptions within our business, testing, and validating the idea. At Smion, we developed a unique system called the “Startup Drill Board,” which facilitates the process of developing entrepreneurial ideas and enables faster and easier testing of risky assumptions about our business.
Burn Rate
The net monthly loss, or the funds that a startup company spends from its venture capital to cover general expenses before generating positive cash flow from operations.
Churn Rate
The monthly or annual rate at which customers abandon a product or service. The result of the churn rate is a loss of revenue.
Customer Validation
One of the most critical phases in the product development process. It tests assumptions and hypotheses regarding the customer’s problem, target market, and product.
TAM (Total Addressable Market)
The total market opportunity available to a startup, i.e., the maximum value a company can achieve if it realizes its full market potential.
Term Sheet
A non-binding document that outlines the key terms between an investor and a founder before an official investment. It encompasses financial terms, ownership conditions, and investor rights.
Traction
An indicator that a startup is achieving growth and that its products or services are attracting customers. Traction may include revenue growth, user count, or other key performance indicators.
Validated Learning
Learning about assumptions regarding a business model derived from conducting experiments with users.
Venture Capital (VC)
Investment made by capital firms (VC funds) in small, high-risk startup companies with significant growth potential. You can learn more about venture capital on our blog.
Venture building
A methodical approach to systematically creating new companies that are supported in their growth and success. There are five core activities that such organizations focus on: identifying business ideas, building teams, finding capital, assisting in management or managing ventures, and providing shared services. Here, find out how you can enrich your organization with venture building and encourage innovation.
Vesting
The process through which founders and employees acquire ownership stakes over time. Typically, shares are awarded gradually, often with specific conditions such as a minimum period of employment (Cliff), which usually lasts one year. The vesting period typically lasts four years.
Something’s missing?
Can’t find the term you’re looking for? Let us know which term should be included in this list here.
