Startup Terms 101 – All the Basic Startup Terms You Need

Startup Terms 101

Learn the startup lingo to get going on your entrepreneurial journey.

Do you have an idea that you think can change people’s lives for the better? You can make that idea a reality by creating your very own startup. There are many others like you who want to create unique products and services. As of September 2021, there are over 800 startups across the world that have a valuation of over US$1 billion (also known as “unicorns”) which goes to show that startups can be lucrative business ventures. 

However, not all startups see such success. Only 40% of startups are able to become profitable, with one of the major challenges they face being competition. One of the ways to set yourself apart from competitors is to build a comprehensive understanding of the startup universe–and we have got you covered. Read on for a list of all the basic startup terminology you need to know before starting a business.

Acqui-hire

Acqui-hire refers to a talent acquisition strategy where a company is acquired not for its product or service but rather its talented team. This is a method of winding down a failing company and is often synonymous with a distress sale.  

Angel investor

An angel investor is a high-net-worth individual (could possibly be a friend or family member of the startup founder) who invests in a company at an early stage. Such an investment is usually made in exchange for equity in the company. 

Burn rate

Burn rate refers to the rate at which a company is using up its financial resources over time. It is the rate of negative cash flow on a monthly basis. If a company burns through its finances too fast, it runs the risk of running out of money and, thus, out of business. 

Bootstrapping

Bootstrapping is the process of starting a business either with little or no external capital. Under this financing strategy, the company depends on the owner’s personal resources

Convertible note

A convertible note is an investment strategy under which an investor loans money to a company in exchange for equity, as opposed to a return of the principal value plus added interest. The holder of a convertible note can convert it either into a specific number of shares or its cash equivalent

Minimum viable product (MVP)

An MVP is a product at the early stage of development that is tested by early customers of the company. Based on customer feedback, the product is further developed till it becomes a perfect fit for the market. 

First mover advantage (FMA)

FMA refers to a company’s ability to outperform its competitors simply because it was the first of its kind in the market. Although such an advantage might not last forever, firms with FMA tend to dominate the market for years on end.

Pivoting

Pivoting in the context of startups refers to a shift in strategy to make your startup more profitable. Startups usually pivot based on feedback received from customers or experts on their current product or service. 

Valuation

Valuation is the process of determining the financial worth of a startup. Valuation helps decide how much equity an investor must get in return for their investment

Exit strategy

An exit strategy refers to an entrepreneur’s plan to sell their ownership or stake in the company. If a business is successful, an exit strategy helps the entrepreneur make a profit from their shares in the company. If the business is not successful, then the exit strategy could help the entrepreneur cut their losses. 

Whether you are just beginning your startup journey or already have an established business, keeping yourself updated on startup terminology is pertinent to ensuring the success of your venture. 

Header image courtesy of Freepik

SHARE THIS STORY

Share on facebook
Share on twitter
Share on linkedin
Share on email

RELATED POSTS

How Can Entrepreneurs Overcome Loneliness?

How Can Entrepreneurs Overcome Loneliness?

Starting your own business is a project that will take over most of your life. You are straying away from the typical 9-5 jobs that your friends and family may have. The sheer effort you have to make to get a business up and running will leave you feeling lonely. While it might seem almost expected to feel lonely during your startup journey, loneliness is a slippery slope to several health conditions.

8 Techniques to Get Readers Rolling Right into Your Content

8 Techniques to Get Readers Rolling Right into Your Content

We’ve all been there. We’ve spent hours crafting the perfect blog post, article or white paper, but no one is reading it. Why? It could be for a million reasons, but often it’s because we’re not doing enough to get people to come to our content. In this article, we’ll learn about the eight techniques that will help you draw in readers and get your content read!

Amazon vs Flipkart Who Will Win Festival Sale War in India

Amazon vs. Flipkart: Who Will Win the Big Festival Sale War in India?

Amazon India and Flipkart, the two biggest ecommerce giants in India, have always been in a neck-to-neck competition for supremacy in the country. There is no better occasion to showcase their strength and take advantage of people’s shopping mood than during the Indian festive season, which begins in late September featuring various festivals, like Durga Pooja, Dussehra and Diwali.

Reviewing Top AI Boyfriends on Google Play Store

Anima vs. Replika: Reviewing Top AI Boyfriends on Google Play Store

Finding your perfect match can be a long and tedious process. You can go on date after date and still have a long way to go before you find your soulmate. In the meantime, you can curb your loneliness by speaking to an artificial intelligence (AI) chatbot.There are dozens of AI chatbots on the market today that give you the experience of having someone to vent your issues to and discuss your daily lives with.

Shrinkflation

What Is “Shrinkflation” and Why Opting For It Isn’t Companies’ Only Choice

You might have noticed grocery prices are soaring, or your usual go-to pack of chips is shrinking in size—all thanks to massive inflation. As of August 2022, the U.S. consumer price index (CPI), which measures the change in consumer prices for a specific set of goods over a period, has increased by 8.3% (year-on-year). Although it has gone down slightly from 8.6% in May, the highest it has ever been since 1981, it remains high and worrying.