ENTREPRENEUR HUB / 28 JANUARY 2024

Startup Jargon 101: The Female Entrepreneurs Essential Glossary

Starting a business involves more than just having a good idea. To succeed in the competitive startup ecosystem, female entrepreneurs need to understand the basic concepts, from business metrics to funding concepts and be able to speak in startup jargon.

Understanding startup jargon is crucial for female entrepreneurs to confidently engage in discussions, negotiate effectively, and comprehend the intricacies of business transactions. A profound understanding of these terms can be a game-changer for women in business, giving them the linguistic tools needed to shape and articulate their vision.

Having an in-depth understanding of the language is not only about being in the know but also about making well-informed decisions, fostering effective communication, and navigating the complexities of being a new player in a highly competitive landscape.

To support your entrepreneurial journey, I’ve created this A-Z glossary outlining all the startup lingo, language, and terms to enhance your business acumen further, bring more confidence to your communication and allow you to thrive as a successful entrepreneur.

Accelerator

Programs that support startups by providing mentorship, funding, and resources to expedite their growth. Think of it as a turbo boost for your startup journey.When discussing strategies for rapid startup growth and the importance of mentorship and funding in the early stages. Imagine a tech startup joining an accelerator program, receiving guidance from seasoned mentors, securing funding, and making significant progress quickly.

Alpha Release

An alpha release is an early version of software tested by a select group of users to fix issues before a wider release.

The goal of an alpha release is to ensure the software is of good quality and meets the needs of the intended users. An agile approach would involve constant collaboration between developers and stakeholders, allowing for quick adjustments based on evolving project requirements.

Angel Investor

Angel investors provide seed money to startups in exchange for an equity stake, anywhere between 10-25%. These investors carry substantial risk and generally represent only a small portion of an investor’s portfolio. They are motivated by their genuine interest in the concept and may choose to be either hands-off or deeply engaged in the early stages of the company’s development. They tend to provide more than just funding to start-ups, offering mentorship and networking opportunities.

API

API stands for Application Programming Interface. They are software interfaces that let different programs communicate and share data. They provide a standardised way for software components to work together using common protocols and procedures. Examples include social media bots, third-party login, e-commerce transactions, and weather apps.

b2b

B2B (business-to-business) refers to transactions between businesses, such as suppliers and wholesalers, or wholesalers and retailers. These transactions involve the exchange of goods, services, or information.

There are 4 common types of B2B relationships:

1. Manufacturer-Distributor
2. Manufacturer-Retailer
3. Manufacturer-Wholesaler
4. Service Provider-Client

b2c

B2C (business-to-consumer) refers to the process of businesses selling products and services directly to consumers, with no middle person.

BOOTSTRAPPING

Bootstrapping refers to the practice of starting and funding a business with your resources without the need for external financing such as venture capital or major loans. Bootstrapped companies build their businesses from scratch, relying on personal savings to fund the growth of their startup. The term “bootstrapping” originates from the iconic expression “to pull oneself up by one’s own bootstraps.”

Bootstrapping is a great way to get funding for your business without giving away ownership or taking on a lot of debt. However, it comes with some financial risk because you are using your money. But if you take some smart steps, you can minimise the downsides and enjoy the benefits of financing your business yourself.

cash runway

Cash runway is the length of time a business can operate without running out of funds. It’s crucial for startups with investor backing to control expenses between fundraising rounds. The longer a company can sustain and grow without needing more money, the better its chances for long-term success. The ideal runway can vary based on factors like the business model and investor expectations.

How to calculate your Cash Runway

Cash Runway = Total Amount of Cash / Monthly Net Burn Rate

cac

CAC stands for customer acquisition cost. It is an important business metric that measures the cost associated with acquiring a new customer.

How to calculate your CAC

CAC = (Cost of Sales + Cost of Marketing) / New Customers Acquired

CAC benchmarks vary across industries so its worthwhile investigating whats relevant for your market. Here is a guide to help you get started – Click Here

cap table

A table outlining the equity ownership of a startup’s shareholders. It’s a visual map of who owns what in your business, including ownership stakes, types of shares and option pools.

cliff

The term “cliff” describes the period when employees or founders do not receive stock options. It refers to the waiting period that must pass before the options can start to vest, after which they do so on a predetermined schedule. Usually, the cliff period is one year, meaning that 12 months must pass before an employee’s options can begin to vest. (See “Vest” below)

CHURN RATE

The churn rate, which is also known as the rate of attrition or customer churn, is the pace at which businesses lose customers during a period. It is usually represented as a percentage of customers, clients or subscribers who cancel or don’t renew their subscriptions within a specific time frame.

To Calculate The Churn Rate = Lost Customers / Total Customers (At the start of the period) x 100

To find your industry benchmark – read this

cOMPETITIVE ADVANTAGE

Competitive advantage is what makes an entity’s products or services more appealing than its competitors. This can be categorised as comparative advantages and differential advantages. Comparative advantages refer to producing goods or services more efficiently, while differential advantages refer to having superior and distinct products.

COTTAGE INDUSTRY

The cottage industry refers to the small-scale production of goods and services using traditional and low-tech methods. Families typically run it and operate in a decentralised manner. Handmade handicrafts and textiles are classic examples of the cottage industry, providing a primary income source for many rural communities worldwide.

CROWD FUNDING

Crowdfunding is a fundraising approach involving soliciting small contributions from a large community. It has become a popular alternative financing option that enables individuals or organisations to access funding without relying on traditional funding sources. For instance, two entrepreneurs can launch a crowdfunding campaign to support their innovative business idea on a platform like Kickstarter, encouraging its community to contribute modest amounts that collectively build a substantial amount that allows their project or business idea to progress to the next phase.

Is equity crowdfunding the same as crowdfunding?

Equity crowdfunding is not the same as crowdfunding. It involves selling small parts of your business to a large group of investors and is becoming popular among startups for quick capital raising.

Customer Development

Customer development is a framework that helps determine if a product satisfies the needs of the customer or not. The customer development process has four principal stages: customer discovery, validation, creation, and company building.

dragon

A dragon is an investor who provides a large amount of capital to a start-up. A dragon can be in the form of an angel investor, a venture capitalist, or a wealthy individual who invests in start-ups. Typically, dragons are experienced entrepreneurs who have the knowledge and resources to provide valuable support to the start-ups they invest in.

dtc

DTC stands for direct-to-consumer; it is a retail model where a brand or manufacturer sells its products directly to end customers. This allows them to cut out third-party retailers and wholesalers. This approach enables brands to establish direct relationships with customers and gain valuable insights.

What are the key components of a DTC?

• Responsible for managing their own product inventory and fulfilling orders when customers make a purchase.
• Don’t rely on third parties to source or deliver their products.
• Invest in their direct communication channels with customers.

early adopters

The early adopters are the first customers to embrace a new product or service, setting the trend for others to follow.

ecosystem

In startup lingo, an ecosystem is a network of relationships with various entities like companies, customers, partners, and stakeholders. These are required to scale up or enter new markets. This ecosystem can help start-ups leverage existing partnerships, access resources and knowledge, and pave the way for accelerated growth.

evangelists

Evangelists, also known as brand evangelists or advocates, are individuals who feel strongly about a brand and become passionate, loyal supporters. They spread the word about the value a brand has provided to them and encourage others to follow suit. These early adopters are enthusiastic brand ambassadors who promote a product or service to others.

exit strategy

An exit strategy is a detailed plan for a startup founder to withdraw from the company and realise its value. It includes selling the business or going public through the stock exchange. By formulating an exit strategy, the founder can plan, identify opportunities and challenges, and mitigate risks for a smooth transition.

founder

The individual/s or team responsible for founding and leading a startup. They are the innovative leaders who shape the path of the startup.

go-to-market strategy

A Go-To-Market Strategy (GTM) is a precise plan to introduce a new product or service to the market and generate demand. It involves identifying the target audience, marketing, and sales strategies, and aligning key stakeholders. A well-formulated GTM strategy positions the product or service as a solution to a market problem.

What are the core components of a successful GTM?

1. Market Definition
2. Target Audience
3. Distribution Model
4. Product/Service Messaging and Positioning
5. Pricing Strategy

GROWTH HACKING

Growth hacking, also referred to as ‘growth marketing’, is a set of digital marketing techniques that are resource-efficient and cost-effective, aimed at expanding and retaining an engaged user base, selling products and services, and increasing brand awareness. It employs innovative and unconventional strategies to achieve rapid growth at a low cost.

incubator

Incubators (also known as business incubators) are organisations that offer support, mentorship, workspace, and resources to early-stage startups. The goal is to help refine business ideas and get startups off the ground. Incubators may take a small equity stake and provide pre-seed funding. They are run by experienced entrepreneurs, venture capitalists, and business professionals.

What is the difference between a business incubator and a start-up accelerator?

Incubators and accelerators are two types of programs that help start-ups grow. Incubators are designed for early-stage development and provide resources to help entrepreneurs refine their ideas and build their companies from scratch. On the other hand, accelerators are targeted towards more mature start-ups that already have a viable product and potential for growth. They provide mentorship and resources for start-ups to scale up quickly.

intellectual property

Intellectual property is intangible ownership of creations of the mind such as trade secrets, inventions, and original work. IP rights protect these ideas, prohibiting theft and allowing owners to profit. It can be owned if created or purchased via trademark, design right or patent.

initial public offering

To transition a company from private ownership to a public entity, an Initial Public Offering (IPO) is required. An IPO is a process by which a privately-owned company becomes publicly listed on a stock exchange. It is important to note that this process is arduous and costly and is only appropriate for established companies with a proven history of success. Nonetheless, it is a highly effective means of raising capital for a company.

joint venture

A joint venture is a partnership where companies pool resources and expertise to achieve shared objectives, such as developing new products or accessing new markets. They also provide start-ups with the opportunity to secure capital and reduce risk.

KPI

Key performance indicators (KPIs) are measurable values used to evaluate how effectively a business achieves its long-term objectives. KPIs support in determining the strategic, financial, and operational successes of a business, particularly when compared to those of other companies in the same industry.

life time value

The lifetime value (LTV) KPI measures the lifetime value of a customer is a financial forecast of the revenue they are predicted to generate over their relationship with your business.

Is Lifetime Value (LTV) the same as Customer Lifetime Value (CLV)?

LTV and CLV are two similar terms with different meanings. LTV calculates the total value of all customers, while CLV focuses on the worth of each customer. By calculating CLV, you can identify customers who are most likely to make future purchases. LTV provides a general overview of your customer base’s overall value.

lean startup

The lean startup approach is a strategy that is used to create a new company or introduce a new product on behalf of an existing company. The method suggests that the products should be developed based on the pre-existing demand of consumers. This is done to ensure that there is an established market for the product as soon as it is launched. The idea is to avoid developing a product first and then hoping that there will be demand for it later.

MVP

The Minimum Viable Product (MVP) is the first version of a product that tests its viability. It’s a scaled-down version designed to make a big impact and validate the product concept with customer feedback. This cost-effective strategy is crucial for a successful product launch and modern business development.

pitch deck

A pitch deck is a concise, visual presentation that is used to pitch a business idea usually to potential investors, partners, or external stakeholders.

What are the key components of successful pitch deck

• an overview of the business, concept, or project
• the problem it promises to solve.
• the proposed solution
• the market opportunity
• competitor analysis
• a concise financial plan with a roadmap
• what you are requesting from the potential investor

pivot

In the startup world, to pivot means to significantly change the business strategy or product. This is most likely due to the business not achieving the desired results and, therefore, urgently needs to make a major shift to succeed. This can involve changing the target market, business model or product itself.

pre-seed funding

Pre-seed funding is the first stage of funding for a startup, used to develop the initial product. It can come from investors or even family and friends

product market fit

A product meets market needs when the cost of acquiring a customer is lower than the customer’s lifetime value. This represents the sweet spot where the product aligns with market desires, leading to increased profitability and customer satisfaction. Thorough market research and analysis are essential to identify this optimal point.

prototype

A functional model to test and evaluate design concepts. It’s the trial version of the product you are planning to launch into the market.

runway

In the start-up world, a runway is the period before a start-up runs out of money. It’s measured in months based on the capital and burn rate. Knowing the runway helps founders and investors plan ahead.

return on investment

Return on Investment (ROI) is a KPI that measures how much profit or value you can get from investing in something. It’s usually expressed as a percentage. A high ROI indicates that you can generate significant value from a relatively small investment, whereas a low ROI means the opposite.

SaaS (Software as a Service)

A business model where software is provided on a subscription basis.

scalability

The ability of a startup to manage and cope with an increase in demand and growth

scrum

Scrum is a management framework that helps teams work collaboratively towards a common goal. It enables product teams to break large projects into smaller, more manageable pieces and ensures continuous progress monitoring. The Scrum leader creates an enabling environment for the product owner and stakeholders to order work into a backlog. The team turns the backlog into a collection of work within the time frame of a sprint. Finally, the Scrum framework allows teams to inspect the results and make necessary adjustments for the next sprint, thus ensuring continuous improvement.

seo

SEO is an acronym for Search Engine Optimisation. It is a set of processes that are used to enhance a website’s technical configuration, content relevance, and link popularity. The goal is to make the website’s pages easily discoverable, more relevant, and popular among users’ search queries. As a result, search engines rank them better in search results.

series a, b, c

Series A, Series B, and Series C are rounds of venture capital financing that typically follow seed funding.

• Series A financing is the first round of funding from venture capitalists that companies receive to expand their business. It involves a large amount of capital and more investors, usually ranging from $2 to $15 million. Investors look for companies with a robust strategy to turn their innovative ideas into lucrative and sustainable business models. Equity crowdfunding is commonly used in Series A funding.

• Series B financing is the second round of venture capital funding that involves larger sums of money and more investors. It is aimed at expanding the business and increasing profits beyond the development stage. Companies that have already gone through seed and Series A funding rounds are eligible for Series B funding. The funds raised in this round are used to grow the company to meet the increasing market demands.

• Series C financing is the third stage of venture capital financing, which typically involves larger amounts of money, and is aimed at further growing the business. Companies that raise Series C funding are already quite successful and use this funding to develop their business even more.

What happens after Series C?

After their Series C funding round, many companies opt for an initial public offering (IPO), while others may continue to use fundraising rounds for expansion and growth.

solopreneur

Is a person who operates a business independently.

What is the difference between a solopreneur and an entrepreneur?

Entrepreneurs hire a team of employees to assist them in their business ventures. On the other hand, solopreneurs work independently or with the help of contract service providers. It is common for entrepreneurs to start as solopreneurs and gradually build their way up to a team-based business model.

sweat equity

Sweat equity is the value created when founders or employees invest time and effort in a start-up. It’s often a way for them to get a share of the company. Sweat equity can also compensate employees or vendors by giving them equity stakes instead of cash payments.

target market

Target market refers to a specific group of people who are most likely to buy a product or service based on shared characteristics such as age, income, and lifestyle. It’s crucial in designing, packaging, and advertising a product/service. Identifying the target market helps create an effective marketing plan and informs decisions about product specifications, packaging, and distribution.

term sheet

A term sheet is a business document that outlines the terms of an investment in venture capital. It guides negotiations and outlines the investment amount, ownership stake, voting rights, and timeline for final agreement drafting.

unicorn

A unicorn is a startup valued at over $1 billion. Coined by Aileen Lee in 2013, there are now over 1,000 unicorns worldwide, including SpaceX, Robinhood, and Instacart.

UI

User Interface (UI) refers to the visual appearance of a product, which includes factors such as colour, font, text, and animation. It also encompasses the overall experience that using a product provides.

UX

User Experience (UX) is the experience someone has when they use your product. It’s how they navigate your website or app and how easily they complete the actions they came to do.

What is the difference between UI and UX?

It is important to note that UX relates to the product’s functionality, while UI relates to its visual appeal.

Why is UI/UX important?

UI/UX design is a critical aspect of starting or running a business. It is imperative that the product is effortless to use and navigate and has a visually appealing and user-friendly interface. Poorly designed UX can deter customers before they even have the chance to try your product. A well-designed product enhances user satisfaction and increases the chances of success.

venture capitalist

A venture capitalist (VC) invests capital in young companies in exchange for equity. Startups often seek funding from VCs to scale and commercialise their products.

vesting

A vesting schedule is a program that offers incentives, such as stock options or retirement funds, to employees after they complete a set term of employment. It helps retain top-performing employees.