25 terms you need to know if you’re talking about startups

87

While reading another article about startups, you may have come across words that were not entirely clear to you. After reading our startup jargon glossary, you won’t be afraid of churn rates and you will definitely come to unicorn status.

Accelerator

– a program that usually lasts 3-4 months, to which startups at an early stage of development apply. For what? Not only to get money, but also to learn something. Acceleration programs usually invest the same amount of money in each of the invited startups (from several dozen to over 100 thousand dollars) in return for a few percent of shares in the company.

In addition to money, they offer a place to work, accommodation, meals, but above all access to great experts in a given field. Some of the acceleration programs specialize in specific industries and invite, for example, startups solely related to medicine or finance. Getting into such a program is not easy at all. The most popular accelerator in the world, i.e. Y Combinator, selects only 100 startups a year from thousands of applications. Another equally well-known program, TechStars, selects just 10 startups to participate in each program.

Incubator

– a place where startups can count on assistance in development. Sometimes incubators are confused with accelerators. The main tenets of both these „tools” are similar, but the devil is in the details. While startups that already operate and need help to grow come to accelerators, incubators invite teams that may only have an idea for a business.

Incubators do not have a strict work schedule. Each team gets its place in a coworking space and usually takes much longer than 3-4 months. Ideas are honed with the help of experts hired by incubators. An important point is also cooperation between individual teams, usually from the same industry.

Bootstrapping

– in other words, financing the company’s development out of pocket. If nobody wanted to invest in your startup, you can say that that was the plan from the beginning. Many experts say you should bootstrap your business for as long as possible because you have full control over it longer. In English, there is a saying „to pull oneself up by one’s bootstraps”, which means „to deal with yourself”, and in direct translation: to lift yourself by the ear in your shoe – an act that might seem impossible.

Burn rate

– the pace at which the startup burns money. It is not uncommon that tens or even hundreds of thousands are spent monthly on development, and the company itself does not yet have revenues.

Churn rate

– the percentage of customers who drop out of the company’s services, for example when a startup switches from a free version to a paid version, implementing its new business model. Then another startup appears that offers the same service for free, takes over customers, then introduces a paid subscription and loses some of them as well.

Gamification

– adding to the service, product or website elements known from games, such as earning points or badges for performing even the simplest activities. Most of us love games and a bit of competition, right?

Unicorn

– „unicorn” is a startup whose valuation has exceeded one billion dollars. The point was, something like this was rare. Today, there are over 150 such companies in the world.

Decacorn

– a company with a valuation of more than $ 10 billion There are at least 14 of these people. The most valuable? Uber.

Pitch

– it’s a presentation of an idea in a verbal form, as if you were to tell someone your business plan. It has to be specific and catchy, and the art of proper pitching is one of the most important skills in the process of finding investors.

Usually, a pitch is a presentation of one or several people with slides in front of a group of investors. The problem and its solution are described, what the startup product or service should be. It is important to tell a little about the band during the pitch. Investors and experts know that in the initial period, employees have the greatest value in a company.

Elevator pitch

– it is a specially prepared, very short version of the pitch, which is used to interest our idea, for example during a casual chat after a conference. Where does this name come from? From Hollywood. It refers to screenwriters who accosted producers in elevators to infect them with their ideas.

MVP

– no, it’s not about Most Valuable Player. It’s not the NBA. MVP stands for Minimum Viable Product, which is the simplest version of a product or service. Bringing the MVP to the market is to test them. This is often much better than sanding a product endlessly. It brings even income.

Growth hacking

– a marketing technique that uses new customer search channels instead of, for example, advertising. Social media, viral materials, blogs are some of the many ways a growth hacker works. Neil Patel, a guru in the field, defines it like this: „Given the meaning of the word hack, growth hacking can be defined as a quick alternative to the slow traditional marketing techniques.”

Hockey stick

– if the company’s revenues grow rapidly and maintain this trend, then their graph may look like a „hockey stick”.

Lean Startup

– it is a method of doing business in which experimenting and adjusting the product to the market reality is more important than careful planning. In Lean Startup, getting to know the market is very important, therefore the Minimum Viable Product (MVP) is an important element in this method. Eric Ries first described this method in 2008.

Monetization

– how are you going to make money on your idea.

Pivot

– it’s a change of the product you are working on with your team to better hit the market reality It could also be a change of strategy or target audience. It is not uncommon that only a scrap remains from the initial product that sells much better. Examples? YouTube started out as a dating video site, Instagram was part of the smartphone game, and groupon brought people together to participate, for example, in political rallies of support.

SaaS

– is short for Software as a Service. In this business model, a subscription to use the tool you have prepared is sold.

Scalable

– one of the most frequently repeated words in a conversation with investors. „I will only give money for a scalable business.” Scalable, which is what? One that is easy to transfer to, for example, another city, country or continent. The most „scalable” software is then, because it does not require the physical presence of the company in a given place.

VC – Venture Capital

– Investments on the non-public capital market in companies at an early stage of development. They are to start the operation of the company or foster its expansion. Venture capital funds count on future returns on investment, therefore, in addition to money, they often offer mentoring support.

B2B

– Business-to-Business. A business model in which a product or service is targeted at business customers, e.g. a tool that improves security in banking systems.

B2C

– Business-to-Consumer. A business model where a product or service is aimed directly at customers, such as Instagram or Skype, that anyone can use.

Know-how

– practical knowledge of a given business resulting from experience and research.

Business angel

– rich person who decides to privately finance someone else’s work, usually a business at a very early stage of development.

FFF (Friends, Family and Fools)

– literally: friends, family and fools. Considered by many as the first group to which you should turn when looking for financing for a business idea.

Disruption

– technology is completely changing the way different areas of traditional economic activity have operated until now. Modern business models at significantly lower costs can offer cheaper products or services and generate higher or comparable profits. Examples: Uber replacing taxis, Airbnb replacing hotels, Amazon replacing physical stores.