If you are an aspiring entrepreneur but a rookie to the finance world, you will often hear various startup jargon words that can befuddle you. As an entrepreneur if you are seeking any kind of institutional form of funding than having a great pitch will not be enough to intrigue your investors, you need to speak their language. Although, you may find various content in the internet space making a mockery of startup lingo, but ultimately in most cases it is wise to know the vocabulary which is common in the circuit to showcase your business plan effectively.
After an extensive survey, we came up with 15 most commonly used startup jargon words that every aspiring entrepreneur should know about, and they are as follows.
1) Accelerator (aka Incubator):
This is not related to the mechanics of the car. Accelerator or AKA Incubator is a center where startups are incubated, mentored and sometimes funded. The process of incubation for startups is same for across the country so whether they are Accelerators or Incubators in Mumbai, Bangalore or any other city same process applies.
Boot-Strapping literally means a startup surviving on Maggi Noodles. In other words, it means a startup which is using personal cash or cash from friends and family to run its operations.
3) B-to-B or B-to-C:
B2B means Business to Business which means your startup business model is to sell products or services to other companies. B2C means Business to Consumer, it simply means you sell products and services to the public.
4) Burn Rate (Run Rate):
Investors are not very keen in putting their money where the burn rate is excessive. Apart then few exceptions like Flipkart. In simple words, its how fast you are blowing your cash!
5) Deck (Pitch Deck):
It’s a short 10 slide PPT that covers all aspects of your startup. The pitch deck in nature should be compact & concise, but it should create a maximum impact. (Advice from CI Business Mentors : you can only create impactful deck when there is lot of collation a real feedback and not just some statistics that you downloaded from sites like Mckinsey & PwC. Real feedback can be like a small video clip of you actual consumers testifying about the product or the service.)
6) FMA (First Mover Advantage):
Not every startup that you see is the first to market startup. But in case if you are then you should definitely point it out to the investors. However, it’s not necessarily a good thing to have a first to market advantage there are a couple of disadvantages of having a First Mover Advantage as well like for an instance you may have to educate your investors about a completely new, prevalent and untapped market. Convincing the investors to invest in a market which does not have clear established demand can be a tough nut to crack.
You probably must have heard this term a lot. What it simply means is that that you have created a model in which your basic product is free and your final endeavour is to upsell features to your consumers once there is enough traction. This is a pure marketing ploy often used by Mar-Tech and Directory related startups.
8) Lean Startup:
Lean startup is more or less similar to Growth Hacking. The ideology behind starting lean is to prove your business concept as you go. It's about understanding what is working best for your consumers in the cheapest and effective way via constant feedback.
9) MVP (Minimum Viable Product):
MVP is one of the most important lean startup techniques. It’s the bare-bones version of a product which is required to achieve proof of concept.
When a startup is ‘Pivoting’ it means that they may be using the established tech for an entirely new purpose. Changing directions of the company entirely or it can also mean doing business in a different market segment.
11) Market Penetration:
Market Penetration simply means what is the percentage of the potential market you hoping or have captured. The VCs would also want to know how fast you can capture it.
12) ROI (Return On Investment):
Simply put, it’s what investors expect to get for what they put in. It can also mean your returns over a particular marketing campaign.
13) SaaS (Software As A Service):
Having a SaaS startup means you sell subscriptions to use the software you have designed.
14) Sweat Equity:
As the word suggests ‘Sweat’ in other words Hard work Equity. What it means is that the Startups giving an equity percentage to person for his or her hard work in the company. This is an excellent recruiting tool to attract passionate employees.
15) Term Sheet:
The Term Sheet is basically a document which tells what percentage of ownership and voting rights will the Investors get for putting funds in your business.
16) Value Prop:
What is the most unique or attractive feature of your product or service?