Although entering the business world can be quite thrilling, it does require some preparation. Namely, you’ll have to learn new vocabulary.
While these words sound fancy and complicated, most are just ordinary words used figuratively. Still, deciphering them isn’t always easy.
But to communicate with other members of the startup world, you’ll need to understand them.
In this article, we’re going over the most common startup buzzwords you need to know as a young entrepreneur. By the end of the list, you’ll be equipped with a disarming arsenal of business jargon.
An accelerator promotes the growth of a startup. Entrepreneurs employ these programs to scale their companies as fast as possible. They usually last from 3 months to one year.
Btw, we have an article with UK accelerators and incubators. You might want to check it out if you’re from Europe.
Agile as a startup buzzword
In business parlance, being agile means responding to fluctuations in market demand immediately.
In software development, agile management means focusing on slow steady steps instead of going for big launches. This gives a company the opportunity to gain customer feedback and use it to improve the product continuously.
Angel Investment/angel investors
When a company is on the bleeding edge, it means it is making ground in new technology or approach.
Bootstrapping is a form of reinvestment. When a company makes a profit, the leader uses the money to develop it further. This gives their business financial independence.
Without having to rely on other investors, a founder gets to keep full control of their company.
This is a short-term loan a startup can take. It generally lasts from two weeks to three years. It is synonymous with a swing loan and often helps a company survive till it acquires long-term financing.
Burn rate refers to how fast a company spends or ‘burns’ its investors’ assets. This always refers to negative cash flow because the company hasn’t become profitable yet.
Burn rate is a great way to keep track of the company’s spending. It’s generally evaluated every month.
Cottages are small, unpresuming buildings. A cottage business is essentially the same.
This type of company operates on a small scale and rarely intends to expand. A good example would be selling homemade goods on Etsy.
Also known as crowdfunding, this method refers to sourcing ideas or funds from a crowd. With the advance of technology came many platforms that make this much easier.
The customer journey encompasses every moment a customer has interacted with a business. It doesn’t mean just buying a product, it can be simply visiting the company’s web page.
A decacorn is any company that passed the 10 billion dollar valuation mark. WhatsApp and Snapchat are some of the most famous decacorns.
A dragon is any startup that managed to raise 1 billion dollars from investors in just one round.
Early adopters are valuable product-tester during the company’s early stages. However, they are not its final target audience.
Equity financing increases the company’s funds. It does so by selling shares to potential shareholders.
These investors then receive dividends or wait for an exit such as an initial public offering or acquisition. This way, they can recover their investment.
When the company wishes to leave a certain market sector, it must have a good exit strategy in mind. This will help them achieve their goal without gaining debts or losing shareholder equity. This strategy helps the company seize a market opportunity the moment it arises.
An exit means transferring the ownership of your company to another one while repaying your investors.
First Movers Advantage
This is an advantage of a company that comes up with a certain product first. This helps them find solid footing in the target market. Think of it as a halo effect. Customers look more favorably to those who come first.
Thus, FMA helps the startup build brand recognition and customer loyalty.
True to its name, gamification means including game-like elements in a product or service. This can be anything from milestone rewards to competition with other users.
This marketing technique can motivate consumers to use the product more often.
Growth equity benefits startups that have good growth potential but lack the necessary capital. This form of private equity investment helps such businesses grow further.
Companies must have a functional business plan and positive cash flow to be eligible for this type of investment.
Contrary to accelerators, incubators fund startups during their early stages. These organizations practically babysit the new company for the first couple of months. Sometimes, this arrangement can last for years too.
Of course, it isn’t for free. Incubators get equity in return.
This type of startup has to work with lean resources. In other words, with minimal funds. Every entrepreneur dreams of this kind of opportunity because it helps them avoid debt.
Many software companies are lean startups because they only need hardware and professional programmers to function.
A low-hanging fruit is one you can reach easily. In the business world, this refers to a product that is ready or almost ready to enter the market. This product must also have strong potential to be monetized.
Of all the startup buzzwords, mobile-first is the most self-explanatory one. It simply means that a product initially focuses on mobile phones rather than computers.
If the product does well on the small screen, the company can adapt it to bigger devices later.
LTV and CAC
LTV or lifetime value of users tells you how much money you get from your customers.
On the other hand, CAC refers to the cost of acquiring a user.
Logically, your LTV should always be higher than your CAC. If a startup wishes to be successful, it has to keep this ratio stable.
Minimum viable product (MVP)
No, MVP doesn’t stand for the most valuable player. In business jargon, it refers to a minimum viable product.
An MVP is important during a startup’s early stages. This prototype version of a new product must appeal to its early adopters.
As its name implies, it’s the cheapest and least developed product that consumers are willing to buy. Many investors first ask companies to release an MVP before they invest in the business. Their funds then help develop the product further.
OPM or other people’s money refers to financial leverage. It represents borrowed capital which a company can use to grow itself.
Pain points represent the problems customers deal with daily. A startup’s goal is to capitalize on these problems by devising solutions. If the customers like this solution, the startup will start scaling rapidly.
In the startup dictionary, a pitch deck is a simplified version of the company’s business plan. Its main purpose is to attract would-be investors. It usually takes the form of a short 10-slide PowerPoint presentation.
To achieve the best results, the pitch should be as brief and on-point as possible.
Pivoting means using the company’s tech and resources for a new purpose. It can also refer to branching out to a new market section or changing the company’s objective.
Owners of ramen profitable companies have enough income to buy ramen dinners. However, they can’t afford to live a more luxurious lifestyle.
Retargeting is a strategy that aims to lure in customers who already interacted with the product via a website. It achieves this by sending banners or e-mails to would-be customers. This can entice them to buy the product.
Runway represents the time the startup has before it depletes all of its financial resources.
A company in the scale-up stage makes enough profits to sustain itself. It then focuses on branching out to different geographic locations and market sectors to expand its customer base.
Seed funding is the capital a startup receives during its infant stages. The idea is that this money nurtures it from a seed to a fully grown tree. It usually comes from friends, families, or investors. Startups need this money to gather the tools and resources necessary to manufacture their product.
Stealth mode means keeping a company’s product or service hidden. This keeps it safe from its rivals.
The term sheet lists the ownership percentage and voting rights of the company’s investors. They get these benefits in return for funding the business.
Traction is the measure of a business’s progress and momentum. It represents the rate at which the company gains value from its users. High traction means the company is doing well.
A unicorn is a company that reaches a 1 billion dollar valuation in just a few years. These companies are compared to unicorns because of how rare they are. Uber and Airbnb are both unicorn companies.
VC stands for venture capital. Venture capitalists invest in a startup with low profitability. However, this is one of the riskiest forms of investment because they have no guarantee the company will succeed.
Vesting means gaining ownership of a present or future payment, benefit, or asset.
A wireframe is a sketch of an app’s or a website’s intended look. It depicts everything from the general layout to specific graphic elements’ location.
What do zombies mean in the startup world?
This is one of our favorite startup buzzwords. Zombies are companies that barely scrape by. They have enough finances to keep going. However, they have large debts and spend all profits on covering these debts. While they can hold them off, they can never pay them back fully.
In short, these are stagnant companies without a future.
FAQ about startup buzzwords
What are some common startup buzzwords and what do they mean?
Disruptive, scalable, pivot, lean, unicorn, and MVP are startup buzzwords. Disruptive products and services challenge the market. Scalable businesses can grow without costing more. Business strategy pivots. Lean means efficient resource use. Unicorns are startups worth over $1 billion. Minimum viable products (MVPs) are the simplest products that work.
Are startup buzzwords just jargon or do they have real meaning?
Startup buzzwords can lose their meaning if overused. Buzzwords should be used contextually and not as filler. Buzzwords can clarify complex ideas, but overuse can sound insincere or unoriginal.
How can I incorporate startup buzzwords into my pitch or presentation?
Startup buzzwords should be used naturally and relevantly in pitches and presentations. Avoid overusing buzzwords and using them as crutches. Explain buzzwords to your audience.
What are some examples of successful startups that have embraced startup buzzwords?
Airbnb, which disrupted the hospitality industry, and Dropbox, which grew “lean,” are successful startups that have adopted startup buzzwords. Uber, a “unicorn,” and Instagram, a “MVP” startup, are other successful startups with buzzwords.
How do startup buzzwords affect the culture of a startup or the industry as a whole?
Startup buzzwords create a shared language and understanding among team members, affecting culture. They can also give the startup a purpose and identity. Buzzwords can shape industry trends and conversations about new ideas.
Are there any negative connotations associated with using startup buzzwords?
If misused, startup buzzwords can be negative. Buzzwords without context or substance can sound insincere or unoriginal. Buzzwords can also limit communication and ideas.
What are some alternative ways to communicate the same ideas without using startup buzzwords?
Plain language, storytelling, and examples can help explain startup concepts. Instead of using buzzwords, explain ideas clearly and compellingly. Real-world examples and anecdotes make key concepts more relatable.
Do investors place more value on startups that use trendy buzzwords?
Startup investors care about return potential. Investors care more about substance than buzzwords. Instead of using buzzwords to impress investors, startups should focus on building a solid business model and a clear path to profitability.
Are there any downsides to relying too heavily on startup buzzwords?
Overusing startup buzzwords has drawbacks. First, it may impair communication. Buzzwords simplify complex concepts, but overusing them can obscure key details and make it hard for stakeholders to understand a startup’s true value. Using too many buzzwords can also make you seem insincere, which can damage your credibility with investors, customers, and coworkers.
How can I stay up-to-date on the latest startup buzzwords and trends in the industry?
Staying connected to the startup community helps you keep up with the latest buzzwords and trends. Attend events, read industry publications, and follow startup influencers on social media. Share ideas and learn about industry trends with other entrepreneurs and industry experts. Finally, avoid using buzzwords without understanding their meaning and value.
You should also check out these articles about what is considered an early-stage startup, how many shares should a startup have, what a CFO does in a startup, what a COO does in a startup, and what a CTO does in a startup.