Startup Words Dictionary

Usually this is a product, marketing and business mentoring program and some seed capital in exchange for company shares. The terms vary by accelerator program, but it's usually geared towards early-stage startups with inexperienced founders.

The process of acquiring a business in order to hire the team that supports it. Key people can be requested to stay longer for a specific period of time.

Acquisition is when one company or investment group buys another company. This is a common way for founders and previous investors to exit a company and et a handsome return on their investment.

Customer acquisition is the act of turning a prospect into a paying customer.

The amount of the round reserved for a particular investor (or fund, group of investors, etc.) is usually expressed in units of fiat currency.

Web analytics is the measurement, collection, analysis, and reporting of web data to understand and improve web pages. In short, tools such as Google Analytics provide an overview of how users interact with your website.

An angel investor is someone who invests their capital early in the growth of a small business (an alternative to venture capital as a source of funding, often in early-stage startups).

Annual recurring revenue is the expected revenue your business receives each year. Basically the accumulated monthly recurring revenue (MRR).

A clause in the contract that protects investors against a significant reduction in their investment (in percentage ownership) in later funding rounds down the line.

An attribution model is a rule or combination of parameters that define how to attribute conversions (sales) to a user's contact points. For example, if a user reads an email and then searches online for a brand before buying, is the email responsible for the sale or the website? Attribution modeling tries to answers these questions but is far from 100% accurate.

The number of customers lost within a given period of time expressed as a percentage. See also churn / retention rate.

Big Hairy Audacious Goal. This is a hugely ambitious goal to inspire and drive progress.

A self-funded startup that doesn't take on seed or angel investment money. Instead, the startup is run very lean and on its own revenue (usually a founder of a bootstrapped startup pays themselves little or no salary).

The bubble describes the time span in an economic ecosystem in which the industry is overvalued but the participants don't see it until the market corrects itself (bubble bursts) .

The rate at which a startup or company "burns" its cash reserves to meet its expenses, expressed monthly or weekly. Generally applied to a company with little or no revenue operating on investment funds.

The Chief Marketing Officer (CMO) is the executive responsible for the companies team, strategy and initiatives. They orchestrate the most important direction of brand marketing communications.

The Chief Product Officer (CPO) is responsible for planning and executing an organization's strategic product initiatives. They guide the overall direction of a companies product, including its roadmap, the features and how they will be expressed.

The Chief Technology Officer (CTO) is the executive responsible for the organization's technology team and strategic technology decisions. Often in tech startups, the CTO is a co-founder and / or shareholder.

Formal document describing the ownership and capital structure of a startup, mostly used to determine the percentage of shares held by each investor or employee of the company.

Capital is used to refer to financial assets, like money in bank accounts and/or money raised from other sources of financing such as investments or business loans.

The portion of the profit gained that an asset manager can retain as remuneration. It can also be referred to as "performance fee" or "incentive fee" and usually ranges be between 15% and 30%.

Also known as retention rate, but the opposite side of the coin, the churn rate describes yearly rate at which customers cancel their subscription of a product or service. Basically, the number of customers who leave the startup each year as a percentage.

Vesting usually applies to a so called vesting schedule. "Cliff vesting" typically occurs when an employee or investor fully vests on a specified date rather than partially vests over a long period of time.

There are different stages any company goes through in the course of it's life-time: Idea stage, startup stage, growth stage, expansion stage and maturity stage.

A form of marketing which involves the creation and distribution of content (in any medium) that does not explicitly promote a brand but is intended to generate interest in products or services.

Conversion rate optimization (CRO) is a systematic process of improving a website or app iteratively to increase the percentage of users who complete desirable actions like purchase, registration or lead submission. It often goes hand in hand with doing a UX audit and improving the UI/UX design of the product based on the findings of the audit.

Simply put, convertible notes (CN) are a type of debt financing that converts into shares. When using a convertible note to raise initial funds, the debt is automatically converted into equity at the closing of the Series A round. Convertible investor bonds are converted into equity on pre-agreed terms, rather than loans from creditors accruing interest.

The cottage business isn't going to grow to become a large company, so it's not a viable investment for VCs or Angels, but it could be a rewarding lifestyle business for its founders.

Crowdfunding (not to be confused with crowdsourcing) typically involves raising capital from a large crowd through a third-party platform. Simply put, ask many people for a small amount each in exchange for some way of participating in your companies success.

Crowdsourcing (not to be confused with crowdfunding) is usually free and involves soliciting contributions to a task or project by involving a large number of people. For example, instead of paying for focus groups, ask the Reddit sub for an opinion on a prototype.

CAC is one of the most important metrics in the unit economy of a startup and allows a company to keep track of how much it costs to acquire a new customer. Calculated as direct acquisition costs (usually marketing and sales costs) divided by the number of new customers, CAC allows startups to understand which channels offer the best ROI on marketing spend.

CRM is the process of tracking and managing customer relationships (usually synonymous with the type of software that enables this process). For example, automated customer email updates could be part of a CRM strategy.

A virtual data room is an online portal of information used to store and distribute documents. Typically used in funding rounds to store due diligence related documents for investors.

Debt capital is financing that a company raises by getting loans or other forms of financing which have to paid back with interest (debt can be an alternative to giving away equity in exchange for funds).

Dilution occurs when a startup issues new shares, which reduces the ownership percentage of its current shareholders. Think of it as a cake, the more people want a piece, the more pieces you need and the smaller the pieces have to be. So, as the number of available shares increases, for example during a financing cycle, each current shareholder owns a lower or reduced percentage of the company and reduces the value of each share.But the the overall value of the cake might increase massively due to higher valuation as more investors join making even small ownership percentages very valuable for its shareholders.

A funding round where startups have a lower value per share (that is, a lower valuation) compared to previous rounds

This clause allows owners of certain shares to force other shareholders to sell their shares or agree to sell the company. This prevents another group of shareholders from blocking the sale of the company.

The process where investors assess the investment opportunity and if it can be an investment case for them and ensure that the information provided by the startup is correct.

A short description that provides an overview of your business. Can you describe your startup's value proposition in the time it takes an elevator to reach the next floor?

The Enterprise Investment Scheme (EIS) is a UK government program that helps young and high-risk businesses increase their financial resources by offering generous tax breaks to investors.

The value of the shares given out (issued) by the startup (or other company) and owned by another person or business entity. For example, we own 63% of the startup share.

Equity capital is the capital / financing that a company obtains from investors in exchange for equity or shares (in this case, equity can be an alternative to debt capital).

Collective equity refers to raising capital by asking a many people to make small investments for a small amount of equity, usually through a third-party platform.

An exit strategy is a plan that a founder makes to sell the ownership of a company to other investors / companies. Exit strategies give business owners the opportunity to reduce their shares in a company (usually profitable).

A [startup] founder is the person who launches the startup, oftentimes with other co-founders. A more broad definition might be "a person or enterprise trying to identify better ways to solve an existing problem or fill a gap in market".

Generally a term used to describe the process of raising capital by exchanging equity for an investment from an outside entitiy (can also include alternative forms like crowdfunding or debt finance).

Through gamification, a startup can add game mechanics to a product or service to encourage users to perform specific actions by earning rewards like badges or points competing with leaderboards and other elements like avatars and urgency.

A go-to-market (GTM) strategy is the plan a founder or startup has for entering a market and promote their product to succeed.

Growth hacking is the overall term for growth-related strategies to increase revenue or the number of users. The phrase is usually used in the startup world to describe how to grow substantially in a short timeframe with relatively small budgets.

A phrase for a growth chart or graph that shows rapid and exponential growth.

Similar to an accelerator, but particularly focused on innovation and the "incubation" of a sustainable company concept. In the same way that an accelerator program provides mentorship and capital in exchange for equity, an incubator also provides mentorship and capital.

A group of investors who have agreed to take part in a startup's fundraising round.

A landing page is a separate web page developed for a specific advertising campaign in marketing. The phrase is currently used more generally to refer to any web page that is transactional or marketing-oriented.

The investor who chooses to take on the leading role negotiating investment terms and carrying out due diligence in a funding round.

When starting a new business or releasing a new product, the lean startup methodology is used to rapidly and efficiently validate a business proposition.

The total value of a single customer to a startup over the course of their partnership. e.g. The LTV for a $1 per month subscription is $18 if the average client subscribes for 18 months. When calculating unit economics, this is crucial.

Within a certain timeframe, the percentage of a whole market that your startup will win as customers.

The process of employing software to automate marketing tasks is known as marketing automation. Automation, which is most typically used for email, is simply the usage of triggers to initiate certain tasks. When a person signs up for a newsletter, for example, they will receive an automated welcome email.

A marketing dashboard gives entrepreneurs a single view of all of the most essential marketing KPIs, eliminating the need for manual reporting and helping them to make smart marketing decisions.

Money spent on advertising directly (paid search, paid social, display advertising, etc.) rather than fees charged by marketing agency or other connected costs.

A minimum viable product (MVP) is a version of a product that has enough features to be useful to early customers and is used to validate a business or product idea. The feedback from the MVP customers is used to iterate and validate the idea for continuous improvement.

Any competitive advantage that a startup has over competitors that makes the business model "defensible" is referred to as a moat or economic moat. Potential competitors will face a significant barrier to the entrance in the future, and existing competitors will be unable to copy your business model.

Monthly recurring revenue is income that a company earns on a regular monthly basis. In SaaS or subscription-based businesses, this is usually a key metric.

PPC (a subset of the larger Paid Search environment) allows businesses to advertise in the sponsored listings of a search engine or a partner site by paying either per click or per impression.

A pitch deck is a document that highlights all areas of a startup and its business model in order to get investment from Angels, VCs, and other investors or win key partnerships.

The process of turning a failed product or service into a successful one by combining expertise and current resources.

A company that gets funding from a venture capital firm or an angel investor is now a portfolio company of that firm or individual.

The post-money valuation is a way of expressing the value of a company after investment. This value is the sum of the pre-money valuation and the amount of new money invested.

With pre-seed financing, we pursue the goal of securing initial financing for startups by building their minimum viable product and laying the groundwork for the next stage.

A pre-money valuation is a term widely used in the private equity and venture capital world, especially in relation to startups. It refers to the valuation of a company or asset prior to investment or financing.

Private equity (PE) is considered an alternative form of investment and is also known as equity capital. This involves equity investments in companies that do not want to or cannot finance themselves via the stock exchange, but they may nevertheless be listed on a stock exchange. Private equity can offer much better returns compared to public stock markets.

A product manager is the person who analyzes the customer needs and the bigger business objectives that a product or feature should meet, communicates the product vision, and, in many cases, oversees the product development team. He is like the CEO of the product.

Product marketing is the process of bringing a product to market. It is a subset of marketing. With the goal of raising demand, this includes determining the product's positioning and message, launch strategy, and ensuring potential consumers understand the value of the product feature set.

A product roadmap is a high-level visual overview that outlines the vision and direction of your product offering, with an emphasis on features and user benefits. Some businesses decide to make their roadmap public.

A prototype or example of a product or service that can be used to demonstrate that it works. Also see MVP.

Referral marketing is an approach that uses recommendations and word of mouth to expand a company's customer base through existing customers' networks.

How would a company's financial performance in terms of revenue appear if present results were extrapolated over a longer period of time?

The monthly or weekly rate at which a corporation drains cash reserves to cover expenses. (Also see Burn Rate.)

What are the limits to how big a startup can expand and what are the roadblocks to growth? A firm that is less scalable may be classified as a lifestyle business (see Cottage Business).

When a startup enters the expansion stage, it is referred to as a scale-up.

The act of optimizing a website so that it appears in search engines for relevant search queries, with a focus on user experience, crawlability, indexability, and content relevancy.

The first recognized stage of equity fundraising is seed capital. It is usually the first round of institutional funding that a business receives. Seed funding is a specialty of some VCs or Angel investors, who typically demand a bigger equity position to compensate for the heightened risk of early-stage enterprises.

Series A funding can be used to improve or develop a startup's product or service after it has established a track record (as demonstrated by KPIs such as Monthly Recurring Revenue, User numbers, sales etc).

A shareholders' agreement is a contract signed by all or part of the investors of a startup. It governs the interaction between shareholders and the company's management, as well as share ownership and shareholder protection.

SaaS (Software as a Service) is a software licensing and delivery paradigm in which software is licensed on a subscription basis and is centrally hosted, typically in the cloud.

Originally used to define all of the technical services required to construct and run a single application, the term is now used more broadly to refer to a collection of technologies and tools utilized by a company to accomplish a specific task.

The phrase "startup" refers to new businesses in their early stages of development, which are typically marked by high costs and low revenue (funded either by the founders themselves are external investment).

A startup that operates beneath the radar, keeping its value proposition / product a secret prior to an official launch in order to avoid prematurely alerting competitors.

Early employees or contractors are given shares/equity in a startup in lieu of some (or all) of their income.

A syndicate is a fund that pools money from various venture capitalists or angel investors. They are usually led by a specialist investor and funded by institutional or sophisticated angel investors. Syndicates are usually kept secret.

A startup that is being considered for funding by a venture capitalist or an angel investor (the startup becomes a target of that particular VC or Angel).

A term sheet is a non-binding agreement that outlines the fundamental terms and conditions of a potential investment. The term sheet is a template that acts as the foundation for more elaborate, legally enforceable papers.

The total addressable market, often known as the total available market, is a term that refers to the financial potential for a product or service.

Evidence that your product or service's users are willing to pay for it. Progress or initial expansion is represented by traction.

A former startup with a market capitalization of more than $1 billion (usually in the IT or software sector).

Unit economics describes all the variables used to calculate a business model. When calculating the profitability of a product or service, this is crucial. Customer Lifetime Value (LTV) divided by Customer Acquisition Costs (CAC) is a rough calculation.

A venture capitalist (VC) is a private equity investor that provides capital to companies exhibiting high growth potential in exchange for an equity stake.

The value of a startup or product calculated or expressed by either investors willing to invest in the company at this valuation or the public market in case of publicly traded companies.

The value proposition (also known as the Unique Selling Point/USP) of a startup is what makes it stand out to customers and investors.

The length of time that founders and employees must stay with the company before getting their full ownership stake. Can be accrued over time. Often the shares get vested incrementally every month or quarter.