Every successful company started somewhere.
Nearly all had to deal with at minimum one of these concepts. So if you’re looking to put your big idea in motion — regardless of your business model or industry — it serves you to have a grip on the terms on this list.
An accelerator is an organization which offers a short-term program and mentorship, resources, funding opportunities, and other support to help businesses grow quickly. An example is Elevate, a growth accelerator by HubSpot.
This startup term refers to a small business that is being bought out by a larger company for its workforce. A larger company might buy out another company and do away with the product — simply buying the organization to poach its talented employees.
3. Angel Investor
An angel investor provides funding that is initial to a startup. This person believes in the startup’s idea or solution and provides the entrepreneurs behind it with the money to get started.
Bootstrapping is a type of startup that is self-funded. Entrepreneurs will often use their savings and money from family and friends to start a business, especially for new startups. More than 80% of startups start out through bootstrapping.
5. Bridge Loan
A bridge loan is a short-term loan — usually covering two weeks to three years — that helps a startup access money in between rounds of funding.
6. Burn Rate
Most investors will want to know your burn rate — how quickly you are spending money compared to your capital during a determined amount of time — before doling out funding.
The cliff for vesting refers to the time period required by employees before they can claim a percentage of their shares. The cliff is typically one year, and it’s meant to keep employees — particularly CEOs — around through the early stages rather than taking the benefits and leaving.
8. Co-working Space
Co-working spaces are shared offices by employees from different companies. This is a great option for startups as they are able to pay a lower fee for the shared space than renting or purchasing a full office for their employees.
9. Cottage Business
A cottage business is a startup that works best when they are small in scale. This term is derived from the idea that cottage businesses work best if they are located in a home and not in an office.
Crowdfunding is an alternative, accessible, more democratic form of funding where a company sources capital from a wide range of investors and clients who put up money for a business — purely because of their immediate, individual interest in its offering. To raise funds via crowdfunding, many startups offer pre-orders at discounted rates for their products or services.
A dragon is an uncommon startup that raises $1 million in a single round. Uber is an example a dragon startup.
12. Early Adopters
An early adopter is an influential client who uses your product or service long before the general public does. These clients can often give honest feedback and provide valuable insight to help improve your product before you take it to a larger audience.
13. Exit Strategy
Many entrepreneurs create an exit strategy. This is the plan for how to sell their company through mergers, acquisitions or IPOs. This will enable the founder to transfer ownership and earn money to repay investors.
Freemium models are a popular option for startups. This is when customers are offered a limited version of a product or service free of charge with additional options at a cost.
For example, you might be able to sign up for Canva — a popular design platform — for free, but you can’t access premium stock photos, more storage, or some templates unless you pay for a Pro subscription.
15. Go public/IPO
Publication is the process by which a company places its stock on the open market via an IPO (initial publicly offered) for wider, public investment. This is another way to invest, but the shareholders will still own some of the stock.
16. Growth hacking
This is a term used by marketing startups to describe a targeted strategy that uses low-cost ways to grow a company quickly. Many companies these days turn to social media for growth hacking — hoping to go viral with their products or services without burning too much capital on marketing.
17. Hockey Stick
Investors expect a startup to have a growth curve that looks like a hockeystick, potentially increasing metrics like sales and active users each year.
An incubator provides mentorship and resources for businesses to help them get through the early stages of their startup journey. This program is usually a long-term one, and unlike an accelerator, offers startups these connections and resources in return for equity.
The moment that a startup brings its product to market is called a startup’s launch. Soft launches can also be included. These are less publicized and include beta products and services that help entrepreneurs gauge client interest in their company.
Lean startups aim to create and test products quickly and cheaply to improve their product.
MVP stands for Minimum Viable Product for Startups minimum viable product — a bare-bones model of a startup’s product that will show its key features and selling points without costing a fortune to make a full-fledged product before it has funding.
22. Pitch Deck
If you want to attract investors, you need a strong pitch deck — a presentation on key aspects of your business, including your product, target market, and business plan.
The goal of the presentation is to be concise, informative, engaging, and to show investors that you have an excellent, sustainable idea that will return great returns on their investment.
When a startup makes an abrupt, dramatic shift in its business model, it is called a pivot. This could be in the product, service, and even the target market. An iteration is a smaller change.
This term is used to describe the potential growth and sustainability a startup. Businesses aim to provide goods and services to increasing numbers of people through a sustainable, repeatable business model.
“Scrum” refers to an agile project management method that was originally designed for making decisions within development teams — but it can be applied to other areas of a business.
The scrum framework emphasizes education, creativity, collaboration, and cooperation among three entities: product owner, scrum master, scrum team.
- Product owner A single person with extensive knowledge of the user who manages and prioritizes products.
- Scrum master: The scrum master assists the scrum team by clearing roadblocks.
- Developers: As the primary component of the scrum group, developers collaborate with other members to determine how they can accomplish their work and which tools and techniques the startup should employ.
26. Seed Round
Seed round is the first stage of venture capital funding. This is where an owner finds early-stage investors. This funding round comes after finding angel investors and is followed by rounds of funding named by “series” (Series A, Series B, Series C, and so on).
A typical entrepreneur plans to start and grow his business. Solopreneurs, on the contrary, start and possibly even grow a business by themselves. With the rise in freelance writers, developers, and designers, this model is more common.
28. Sweat Equity
Sweat equity refers to essentially human capital. When you’re just starting out, you might not even have enough funding yet to pay for employee services. Employees that risk putting in the work for a startup can still receive equity — something that could pay off big time should the company receive funding.
A unicorn startup refers to a company with a value of $1 billion. Although these companies are rare, they aren’t as rare as dragons. Startups that raise $1 billion in one round of funding are also known as unicorn startups.
The value of your company can be described as the amount it is worth. However, this valuation is done in two ways.
- Pre-money valuation: This is an estimate of how valuable your company is before you receive any funding. This can be used to help investors decide if the company is worth investing.
- Post-money valuation: This is how much your company is worth after a round of funding plus the pre-money valuation.