Vocabulary startup guide: The startup key terms every founder and entrepreneur should know
Being familiar with key startup terms is a must for every founder and entrepreneur nowadays. It is really possible that you have already heard or read these words on the news or talking with colleges. The fact is that new vocabulary is being introduced into the business atmosphere since the startup market is growing faster than ever.
A lot of new vocabulary is arising, and to make it easier for you to really understand it and be capable of naturally using it in your daily business routine, we have gathered all those startup key terms in one article.
If you want to learn more about what is a startup and its stages before deepening on the startup key terms, you can read our article: How to raise funding for startups.
Startup key terms
Accelerator: This type of companies are micro startup-ecosystems to help startups grow faster. They offer funding and a consulting team so help the founders address the business opportunity correctly. Their objective is to reach the exit-stage of the firm in a period of 5 to 7 years to obtain the maximum profit as investors.
Alpha Release: Startups usually offer software solutions to the market as business model. So, before releasing beta versions of the service, alpha tests are run internally to ensure an efficient software. If it passes the test, the startup can release the alpha version for its workers to test it.
Beta Release: When the software is approved internally it is time to be tested by potential customers, meaning that a beta test will be done. With this procedure, the company obtains feedback what helps making changes before launching the final software.
Bootstrapping: When a startup applies bootstrapping it means that the entrepreneur combines human capital; such as knowledge, skills and experience; with own savings to make their business model grow without looking for funding. This technique is usually applied during the earlier stages of the project.
Business products: When a startup decides to develop a B2B product it means that its target audience are other businesses or companies.
Consumer products: Also called B2C, consumer product startups are those which develop a product that will be sold to the final consumer.
Customer development: Within the Lean startup methodology, it is the point when the target audience is validated and determined through interviews.
Disruption: Startups need to be disruptive, meaning that their offer has to be innovative and make a huge impact in the market and even change people’s way of doing things. An example would be Cabify, which has modified people’s way of moving around the city and setting higher standards regarding this type of services.
Dragon: This term is used to make reference to those startups that return an entire fund. They are capable to raise 1.000 million dollars in one funding round. These startups are more valuable than unicorns, but they are also more difficult to find. An example would be Uber.
Early adopters: They are the clients who test the MVP and offer feedback about the product. These consumers are the first ones who try innovative solutions, so for them, effectiveness is more important than perfection.
Exit-satge: Startups have a life cycle, and each phase requires facing different challenges at all levels. If the startup gets to this last stage it means that it has been a successful project since it is being sold or it enters the stock market.
Founder: When we make reference to a founder we are talking about a doer, maker, creator, a leader. This person is creative and proactive. Real founders try to make their best to make their project grow.
Freemium: This business model offers two types of software services to its consumers: A free plan with few features, and a premium plan with all the features developed. A good example is Spotify. The music platform offers a free subscription with limitations, such as advertisements or not being able to choose the song, and a premium one.
Hockey Stick: It is a term used to describe a startup growth pattern which is characterized by hustling first years, an inflexion point and exponential growth.
Incubator: Compared to accelerators, incubators offer coworking spaces, coaching/mentoring services, contacts and resources to startups in order to to help them grow at a natural rhythm. They help early-stage projects get through the first challenges. Itnig offers a coworking space for startups and entrepreneurs, so we encourage you to take a look at our different memberships on our website.
Intellectual property: Since startups usually bring up to the market an innovative technology, registering the product/service through patents or copyrights to protect the invention from being stolen is highly recommended.
Iteration: Startups learn and develop their business model by the feedback offered from early adopters. When the entrepreneur realizes that some changes need to be made to get the project to grow, he is iterating. In other words, iterating means improving the business model thanks to realizing that minor changes need to be done.
Lean startup methodology: The main idea behind this method is that the startup should bring to the market a minimum viable product as fast as possible. By doing so, the first clients, also known as early adopters, will test the product and give feedback to the entrepreneur. From this information, the founders get to improve the MVP in order to offer the final product.
Minimum Variable Product: We could also call it “developed prototype”. The MVP is an improved prototype that can enter the market so it can be tested by early adopters.
Non-technical: Startups usually offer to the market a technological solution. For that reason, many founders have a technological background such as studies or hobbies. This does not mean that people that do not belong to the tech-world cannot become startup entrepreneurs. Non-technical founders are those who build this type of business model without any tech knowledge.
PaaS: Platform as a Service is use to make reference to those startups that develop a software as product, such as SaaS, but instead they set it up on top of an existing platform.
Pitch Deck: When reaching early and growth stages, entrepreneurs might look for potential investors. To obtain funding from them they must prepare a pitch to present the idea highlighting the key aspects of the startup. If you are looking for investment right now we encourage you to apply to our fund. Every Thursday at 7pm we have our pitch to investors, and we would enjoy learning about your project!
Pivot: Entrepreneurs that realize that the business model needs to be redefined are pivoting. By redefining it we mean changing the target audience, offering a new product or service or even moving to a completely different market.
Product/Market Fit: The startup reaches the product/market fit when the product it offers satisfies the market, getting a dominant market share.
SaaS: It stands for Software as a Service. Nowadays it is common to find new startups bringing to the market softwares of any kind, but need a platform to build their software on from scratch.
Scalability: It is the measure that determines the ability to increase the startup’s performance. Because of the type of business model, which is focused to providing a technology-based solution, startups are able to reach a huge target audience without needing a large number of providers. With lower production costs, they can offer an innovative and economically accessible product, meaning that a scalable startup is capable to handle increased market demands while maintaining or improving its income.
Unicorn: Startups are categorized depending on their market value. Those that reach (or exceed) a 1.000 million dollars before getting to the exit-stage are called unicorns. An example is Aribnb that was valued on 35.000 million dollars in July 2011.
Validation: Here we are talking about the validation of the product/service offered to the market. The target audience is who gets to determine it by, for example, paying for it. There are many other metrics to analyse validation such as when customers recommend your product to others. A way to get to know this information is by asking customers to fill a short product review.
Value proposition: It is required to define what makes the startup different from its competitors in order to survive. Without a value proposition, the brand cannot be positioned correctly make it impossible to succeed.
Wantrepreneur: It is the previous step to become a founder. Wantrepreneurs are people who have plenty of business ideas, but they haven’t started developing any of them yet. It is easy to get stuck on that stage and never build a startup, because of process difficulties such as financing. However, we wrote an article about how to obtain funding for your startup to help you get through this stage!
All these startup key terms will help you get a deeper understanding of the day-to-day business operations of your startup. We encourage you to keep updated to our weekly blog posts to learn more about the amazing world of startups!
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