The Startup Dictionary

New to the startup scene? It can be a confusing place for a lot of reasons, but language needn’t be one of them. In this blog we provide definitions for some of the more obscure phrases you may encounter in startup discussions, so instead of just nodding and smiling you can contribute.

You’ll know the standard business acronyms and phrases by now, but modern startup brings a whole new range of expressions and terminologies to the party. Aside from the standard financial and business lingo, startups are wont to use a whole new lexicon designed to communicate efficiently, but capable of confusing and perplexing the uninitiated. 

We’ve gathered the most impenetrable phrases to help you talk the talk as well as walking the walk at your startup. It’s not exhaustive (it couldn’t be) but there’s a simple solution if you find yourself at a loss in conversation, just ask. You’ll only feel silly for a second and no-one will think any less of you because of it. Oh, and Google!

Accelerator (AKA Incubator) – Any environment where startups are coaxed through the early stages of business development using a combination of mentorship, workspace and funding, often in return for equity.

Bootstrapping – Generating early funding from friends and family, making money any way your business can, and generally being scrupulous with the way you utilise your startups’ resources.

Burn Rate – The rate at which you go through cash and funding. As most startups run at a loss for the first few years, this is something you will be likely get very familiar with, very quickly.

Churn Rate – This is the rate of loss of customers in a subscription or membership business model. It’s a contributor to the leaky bucket effect where acquisition efforts are impeded by member loss.

Disruptive – Any technology or tool that changes the way an industry or consumers do the things they do. It’s redefining the solution to a problem, not just improving it. It’s the definition of a game-changer.

Exit Strategy – You found your way in, but you and your investors will want to know that there’s a strategy for getting out… preferably with a lump sum in your pocket for the trouble. That’s the exit strategy.

Freemium – This is a popular mechanism for apps, websites and games that describes giving away the core elements of a service and then charging for add-ons that improve its capabilities.

Growth Hacking – Want growth without the huge expense of advertising? Time for some growth hacking. It’s about increasing your customer base through savvy use of low-cost methods like social media.

IP (Intellectual Property) – A big one for investors, your intellectual property is an idea, algorithm or technology you can protect legally against being copied or implemented into the competition’s product.

Iterate – To plough through idea after idea and product version after product version in the endless pursuit of the best possible product at any given moment in time.

Lean Startup – A startup that has kept its business as flat in structure and small in size as possible to maintain low running costs and high equity. It’s the smart way to do the early stages of startup. 

Low Hanging Fruit – The simplest possible methods for a business to make a buck. Quick cash generators are often simpler in theory than in practice, but if you can make quick cash, why wouldn’t you?

Monetise – This is a key word for investors. We want to know how you will turn your world-beating idea into a profit making business, that process of turning a product or service into cash is monetisation.

MVP (Minimum Viable Product) – This is the earliest stage at which you can take your product to market. You’ll be spending your resources to get to this stage as quickly as possible because MVP means revenue.

SaaS (Software as a Service) – When your software is provided over a subscription model it’s defined as Software as a Service, and then abbreviated to SaaS – pronounced sah-ss (rhymes with glass).

Scalability – This refers to the ability of your product or service to reach a wider audience. The more scalable the business (i.e. the larger or more profitable the prospective customer base) the better!

Sweat Equity – A great way to take on talented staff without paying the going rate is to offer them equity in return for their work (or sweat), this is a standard practice among ambitious startups.

Term Sheet – One of the most important documents you’ll ever sign. This dictates the terms of a funding deal detailing the percentage of equity and voting rights for your investors following any round.

Validated Learning – Product development is a constant learning process, when your concept is proven, or an idea within it is demonstrated to be true, it’s called validated learning. It’s good news.

Value Proposition – What’s the main difference that makes your startup’s product or service valuable to consumers? When you can define this succinctly and compellingly, you have your value proposition.

Of course, every one of these terms can be applied to hundreds of discussions. We can’t even begin to provide an exhaustive list of terms you may encounter in your quest for startup success, but for handy tips and advice in your salad days, check out the other articles on our blog.