Entrepreneurship is a broad concept with a lot of components that need to be defined, making startup terminology very broad and broad. From finding investors to launching your company to bringing the business to the public, there are hundreds of startup terms to consider.
You may need to discuss a marketing plan, plan an app, design a website, or know your audience. Entrepreneurs also need to know the ins and outs of finding financing, regardless of whether they rely solely on private financing or go public after an impressive valuation – and there are concepts and phrases that cover nearly every aspect of these processes.
If none of this makes sense to you but you are hoping to start a business, take a look at our list of some key startup terms every aspiring entrepreneur should know.
Final list of startup conditions
- angel investor
- bridge loan
- combustion rate
- A space for teamwork
- business hut
- the Dragon
- exit strategy
- Go to General / IPO
- piracy growth
- hockey stick
- best player
- pitch deck
- the hub
- seed round
- solo introduction
- stock sweat
Every established company has had to start somewhere, and the most successful companies established in recent years fit the “typical startup” bill at some point.
Almost all of them had to deal with at least some of the concepts listed below. So if you’re looking to put your big idea into action – no matter what your business model or industry is – it serves you to master the terms on this list.
An accelerator is an organization that offers a short-term program with guidance, resources, and even funding opportunities to help a business grow quickly. An example is Elevate, a growth accelerator by HubSpot.
2. Get paid
This startup term means that a small (and potentially failing) company is being bought into its workforce. A larger company might buy another one and get rid of the product – simply buying the enterprise to hunt down its talented employees.
3. Angel Investor
An angel investor is a person who gives the first funding for a startup. This person believes in the startup idea or solution and provides the entrepreneurs behind it with money to get started.
When a startup does the boot process, it is self-funded. Entrepreneurs will use their own savings as well as money from friends and family to start the business, especially for new startups. More than 80% of startups start through bootstrap.
5. Bridge loan
A bridge loan is a short-term loan – usually two to three years – that helps a startup access funds between funding rounds.
6. Burn rate
Most investors will want to know your burn rate — how quickly you spend money compared to your capital over a specified period of time — before disbursing funding.
The vesting cliff is a period of time required before employees can claim percentages of their stock. Shelf is usually one-year, and is meant to keep employees—particularly CEOs—through the early stages rather than take advantage of benefits and leave.
8. Co-working space
A co-working space is an office shared by employees of different companies. This model works especially well for startups because they can pay a lower fee to use shared facilities than renting or buying an entire office space for a small number of employees.
9. Commercial Cottage
Small businesses are startups that do best if they stay on a small scale. The term stems from the idea that these types of businesses would do well if they were operating inside a home rather than a traditional office space.
Crowdfunding is an accessible and more democratic alternative form of financing in which a company obtains capital from a wide range of investors and clients who provide funds for the business – solely because of their direct and individual interest in offering it. Many startups will pre-order their products or services at discounted rates to raise funds through crowdfunding.
Dragon is a rare startup that has raised $1 billion in a single funding round. Uber is an example of a dragon startup.
12. Early adopters
An early adopter is an influencer customer who uses your product or service long before the audience uses it. Usually, these users can give you insightful and honest feedback to help you improve your product or service before passing it on to your larger target audience.
13. Exit strategy
Entrepreneurs often devise an exit strategy, which is how they plan to sell their company via mergers, acquisitions, or IPOs. Doing so will allow the founder to transfer ownership and earn money to repay the investors.
The freemium model is a popular choice for startups. It refers to offering customers a restricted version of a product or service for free with more advanced options available at an additional cost.
For example, you might be able to sign up for Canva – a popular design platform – for free, but you don’t get access to premium stock images, more storage, or some templates unless you pay for a Pro subscription.
15. Public Offering / IPO
A public offering is when a company puts its shares on the public market through an IPO (initial public offering) for broader public investment. This is another form of investment, but those who buy the shares will own parts of the company.
16. Hacking growth
This is a term for start-up marketing that refers to a focused strategy that uses low-cost methods to rapidly grow the company. Many companies these days are turning to social media for growth hacks – hoping to get their products or services popular without burning a lot of capital on marketing.
17. Hockey stick
Investors want the startup’s growth curve to look like a hockey stick, which could double metrics like sales or the number of active users each year.
Image source: Animas Marketing
The incubator offers business resources and guidance for getting through some of the initial growing pains of startup life. This is a long-term program that, unlike an accelerator, typically offers startups these resources and connections in exchange for equity.
A startup is launched when it finally brings its product or service to market. This can also include a simple launch, which is more than just a test launch with minimal exposure to the press and beta products and services to help entrepreneurs gauge interest in their company from potential customers.
The goal of a “lean” startup is to build and test products as quickly and inexpensively as possible to improve the product through trial and error rather than building a fully developed product that may not attract buyers.
21. Best player
MVP for startups means Minimum applicable products A basic model of a startup product showing its main features and selling points without costing a fortune to make a complete product before it gets funded.
22. Planned Presentation
If you want to attract investors, you need a strong presentation – a presentation on key aspects of your business, including your product, target market, and business plan.
The goal is for your presentation to be short, informative, and engaging to show your investors that you have a great, sustainable idea that will give them a great return on their investment.
A pivot occurs when a startup makes a rapid and drastic transformation of its business model. This may be in the product, service, or even the target audience. The smallest change is called iteration.
This startup term refers to the sustainability and potential growth of a business. The goal of most businesses is to grow and provide goods or services to a growing number of users through a repeatable and viable business model.
Scrum refers to an agile project management method that was originally designed for decision-making within development teams – but can be applied to other areas of business.
The scrum framework focuses on education, creativity, and collaboration between three entities: the product owner, the scrum master, and the scrum team.
- Product owner: One person with extensive knowledge of the user who manages the products and their priorities.
- Scrum master: The scrum master helps clear roadblocks to help the entire scrum team complete their work.
- Developers: As the main component of the scrum team, developers collaborate and decide how to get their work done and what tools and technologies the startup should use.
26. Seed Round
The initial round refers to the first stage of venture capital financing, where the business owner finds early stage investors. This funding round comes after angel investors are found and is followed by a series of funding rounds called “Series A” (Series A, Series B, Series C, etc.).
27. Solo preneur
An entrepreneur usually has plans to start and grow a business. On the other hand, a solo entrepreneur starts and even potentially grows on his own. This model has become more and more prevalent with the emergence of independent writers, designers, and developers.
28. Equity race
Ethnicity is basically human capital. When you’re just starting out, you may not have enough funding yet to pay for employee services. Employees who risk putting work in a startup can still get equity – something that can pay off a lot if the company receives funding.
Unicorn startup is a billion dollar company. While such businesses are rare, they are not quite as rare as dragons, startups raising $1 billion in a single funding round.
Valuation indicates the value your company is worth, but this is determined in two ways: pre-money and post-money valuation.
- Advance cash valuation: This is an estimate of how valuable your company is before you receive any financing. It can help investors determine if your company is worth investing in.
- Post-money valuation: This is how much your company is worth after a round of financing plus pre-money valuation.
Learn about startup conditions to bring your ideas to life
Now that you know some of the most frequently used startup terms, you can feel more prepared to embark on the entrepreneurial path. It will always be intimidating to jump in, but knowing the language can give you some confidence as you begin to boot and look for angel investors.