Navigating the startup world can feel like trying to decode a secret language—one that’s packed with acronyms, buzzwords, and phrases that may leave you wondering, "What did I just read?"
As either a first-time founder, an aspiring entrepreneur, or just someone trying to figure out what folks in the startup world are talking about, it can be a bit overwhelming trying to figure out what all of the lingo means - which is exactly why we’re breaking it down below.
Startup Support Systems
Accelerator
A program designed to support early-stage startups through mentorship, resources, networking, and often funding, usually in exchange for equity. Programs typically last a few months and culminate in a demo day.
Incubator
A program that helps startups in their earliest stages by providing office space, resources, mentorship, and networking opportunities. Unlike accelerators, incubators often focus on longer-term support.
Venture Studio
An organization that creates startups by developing business ideas internally, building teams, and providing operational support. Venture studios typically take significant equity in the companies they create.
Mentor
An experienced professional who provides guidance, advice, and support to startup founders or teams. Mentors often share their expertise without financial compensation.
Advisor
An expert who provides strategic guidance to a startup on specific areas like business strategy, technology, or marketing. Advisors may receive equity or financial compensation for their time and expertise.
Funding and Financials
Angel Investor
An individual who provides capital to early-stage startups in exchange for equity or convertible debt. They often invest their own money and may also offer mentorship.
Family & Friends Funding Round
An early stage of fundraising where founders secure capital from personal connections, such as family members and close friends, often on favorable terms without strict valuation metrics.
Seed Funding
The first official round of startup funding, used to develop the product, hire a team, and gain initial traction.
Series A/B/C Funding
Sequential rounds of funding raised by a startup to grow operations, scale, and expand the business. Each series usually involves larger investment amounts and institutional investors.
Convertible Note
A form of short-term debt that converts into equity at a future financing round, often used during seed funding.
Grant
Non-repayable funding provided to a startup, often by government agencies, foundations, or corporations, to support specific projects or initiatives. Grants do not require equity or repayment.
Investment
The act of providing capital to a business in exchange for equity, debt, or other financial returns. Investments can come from individuals, venture capital firms, or institutions.
Burn Rate
The rate at which a startup spends its cash reserves before generating positive cash flow. It's a critical metric for understanding how long a startup can operate before needing additional funding.
Runway
The amount of time a startup can continue operating before running out of money, based on its current burn rate.
Cash Flow
The net amount of cash being transferred into and out of a business. Positive cash flow means the business has more money coming in than going out, while negative cash flow indicates the opposite.
Cap Table (Capitalization Table)
A spreadsheet or table that shows the ownership breakdown of a company, including equity shares, types of shares, and percentages owned by founders, investors, and employees.
Term Sheet
A non-binding agreement outlining the basic terms and conditions of an investment deal between a startup and investors.
Valuation
Startup valuation is the process of determining the financial worth of a startup, typically based on factors such as its revenue, growth potential, market conditions, and risk. It plays a crucial role in securing investment, as it influences the amount of equity investors receive in exchange for their capital.
Startup Stages
Seed Stage
The earliest phase of a startup’s lifecycle, where the focus is on building the product, testing ideas, and gaining initial traction. Funding is typically sourced from seed investors, grants, or friends and family.
Growth Stage
The stage of a startup’s development where the focus shifts to scaling the business, acquiring customers, and expanding operations. Growth stage startups typically seek Series A, B, or later rounds of funding.
Late Stage
The stage in a startup's lifecycle where the company has achieved significant market traction, steady revenue, and scalability. Late-stage startups often prepare for an exit via acquisition or IPO.
Unicorn
A privately-held startup valued at $1 billion or more.
Operational Concepts
Product-Market Fit
The point at which a startup's product satisfies a strong market demand, evidenced by high customer retention and growth.
Minimum Viable Product (MVP)
The simplest version of a product that allows a team to collect the maximum amount of validated learning about customers with the least effort.
Outsourcing
The practice of hiring external companies or freelancers to handle certain business functions or tasks, such as software development, marketing, or customer support, to save costs or leverage expertise.
In-House
Refers to work performed by employees who are part of the startup team, as opposed to outsourcing to external providers.
Churn Rate
The percentage of customers who stop using a company's product or service within a given period. High churn rates indicate potential issues with retention.
Customer Acquisition Cost (CAC)
The cost of acquiring a new customer, including marketing and sales expenses. Calculated as total cost divided by the number of new customers acquired.
SaaS (Software as a Service)
A software distribution model where applications are hosted by a service provider and accessed over the internet. Popular in B2B startups.
Exit
When a startup’s founders and investors sell their equity stakes, often through an acquisition, merger, or initial public offering (IPO).
Vesting
The process by which founders and employees earn ownership of their equity over time. For example, stock options often vest over four years with a one-year "cliff."
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