Startup jargon: 34 key terms and phrases to know

Author Gordon Vannoni

Posted Mar 17, 2023

Reads 9.2K

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In the world of startups, there is a language all its own. From "b2b startup terms" to "growth hacking", it can be overwhelming for those who are new to the game. But fear not, as we have compiled a list of 34 key terms and phrases that every entrepreneur should know.

Whether you're a seasoned business owner or just starting out, understanding these terms can make all the difference in your success. For example, knowing what "MVP" stands for (minimum viable product) can help you create a streamlined and effective product launch strategy. And being familiar with "burn rate" (the rate at which a company is spending its capital) can help you manage your finances more effectively.

So without further ado, let's dive into the world of startup jargon and equip ourselves with the knowledge we need to succeed in this exciting industry.

Do you work in a startup & need to improve your business English? Discover a list of essential startup terms to help you & your team enhance their startup vocabulary.

If you work in a startup, then you know that the world of business is constantly evolving, and it's crucial to stay up-to-date with the latest terminology in order to thrive in this high-risk high-gain landscape. Whether you're a seasoned entrepreneur or just starting out, there are certain essential startup terms you'll need to know if you want to improve your business English and communicate effectively with your team.

From Airbnb to Instagram, Pinterest to Pandora, and Whatsapp to corporate powerhouses like Amazon and Google, there are countless examples of small startups that have grown into thriving multinational businesses. However, success in this unpredictable business arena requires more than just a great idea; it also demands a solid understanding of the language used by industry insiders. By familiarizing yourself with the essential startup terminology listed below, you can enhance your startup vocabulary and take your business to the next level.

Learn Startup Terms to Bring Your Ideas to Life

Startup terms can be overwhelming and confusing, but it is essential to familiarize yourself with them if you want to bring your ideas to life. Start bootstrapping means starting a business with little or no external financial help, while angel investors are individuals who provide financial assistance to startups in exchange for equity. Understanding these terms and others like them will help you navigate the world of b2b startup investments and funding opportunities.

Discovering the Meaning of a Startup and Its Importance

In the beginning stages of a business venture, startup entrepreneurs undertake the challenging task of developing innovative goods or services they're passionate about. A startup refers to any company that is in its early operations typically within the first 5 years. The ultimate goal of a startup is to meet market demand while generating substantial revenue.

Startups are known for their high growth potential, often leveraging advanced technology such as artificial intelligence (AI) or mobile apps. End Hubspot call-to-action code. However, there is also financial risk involved since many startups fail due to an inadequate business model or failure to meet market needs. To ensure success, securing funding to hire skilled workers and comply with legal requirements is crucial.

Establishing a client base and securing funding are just the basics to kick off a successful startup. Job doesn't stop there; startups must constantly adapt to changes in the current market and plan for the company's future expansion. Knowing startup jargon and meeting market demands are key components of a successful startup journey.

1. Angel investor / Business angel

An angel investor, also known as a business angel, is an individual who invests their own money in a startup company during its initial stage. These investors usually provide seed funding to help the company develop and grow.

Typically, angel investors decide to invest based on the potential of the company's product or service, as well as the experience and background of the founding team. Angel investing can be a great way for startups to secure early-stage funding and gain access to valuable resources and mentorship from experienced business leaders.

2. Bridge loan / Swing loan

A Bridge loan or Swing loan is a short-term loan that helps entrepreneurs make ends meet until they receive long-term financing ranging from 1-3 years provided by banks or other financial institutions. The interest rate on bridge loans is higher than traditional loans because of the temporary nature of the funding.

A bridge loan can be used for many purposes, such as providing working capital, covering payroll expenses, or purchasing inventory. It offers a safety net for businesses to keep running while waiting for long-term financing to come through. With this type of loan, entrepreneurs can continue operations and generate revenue without having to worry about cash flow issues.

3. Burn rate / Run rate

Burn rate and run rate are two critical terms that every entrepreneur spends time understanding. Burn rate is the amount of money a company spends during a set period compared to its revenue. A high burn rate run can quickly deplete a startup's cash reserves, making it challenging to stay in business for an extended period.

On the other hand, the run rate refers to a company's financial performance over time. It is the projection of revenue or expenses based on current figures, indicating how much a business expects to make or spend in the future. Startups need to keep their burn rates low while increasing their run rates to become a profitable company. Understanding these two terms can help entrepreneurs make informed decisions about when to raise funds and how they plan to allocate them towards business growth.

4. Cottage business/industry

Cottage businesses or industries refer to small-scale businesses that operate out of homes or small rented spaces. These types of businesses are popular among entrepreneurs who are just starting and want to keep costs low. However, cottage businesses can experience large growth and become successful companies with a loyal customer base.

Starting a cottage business is relatively easy and affordable, but it requires hard work and dedication to turn it into a successful venture. Some examples of cottage businesses include handmade crafts, homemade food products, and online stores. With the right branding and marketing strategy, these small-scale ventures can attract customers and grow into bigger enterprises over time.

In conclusion, cottage businesses may start small but have the potential for large growth if done right. They offer flexibility in terms of location and low overhead costs, making them an attractive option for entrepreneurs looking to start their own business.

5. IPO (initial public offering) / “Go public”

IPO or initial public offering is a process where a private business "goes public" by offering shares to the general public. This means that anyone can purchase changing ownership in the company and become a shareholder. This is a big step for any startup, as it transforms them from a private organization into a public company, which increases regulatory supervision and decreases the organizations privacy. However, this also provides an opportunity for startups to raise funds by selling shares, which can be used to fuel growth and expansion.

Going through an IPO is an expensive process that requires careful planning and preparation. It involves extensive documentation and legal compliance, making it crucial for startups to work with experienced professionals who can help guide them through the process. Once the IPO is complete, the company becomes subject to increased scrutiny from regulators and shareholders alike. While there are certainly risks associated with going public, many startups choose to pursue this option as it can offer significant benefits in terms of capital raising and increased visibility in the market.

6. MVP (minimum viable product)

MVP, or minimum viable product, is an essential term for any b2b startup. It refers to the most basic version of a product that can be launched with its principal features. The purpose of an MVP is to test the market and get feedback before investing in further development.

By creating an inexpensive version with only a small amount of initial funding, startups can gauge interest in their product highlighting what works and what doesn't. Once they have received feedback, they can decide whether to add extra features or pivot based on customer needs. Essentially, the MVP helps startups save time and resources by validating their idea before committing to full-scale development.

7. ROI (return on investment)

ROI, or return on investment, is a performance measure used to evaluate the profitability of an investment. It helps businesses determine if their investments are generating positive or negative returns. Positive ROI means that the investment has generated profit, while negative ROI indicates a loss.

For a B2B startup, having a positive ROI is crucial as it can persuade investors to invest more money into the business. Investors want to see that their investments are yielding returns and contributing to the growth of the company. By presenting a positive ROI, startups can show potential investors that they have a sustainable and profitable business model. Ultimately, having a good ROI is essential for any business looking to grow and succeed in today's competitive market.

8. Seed funding / Seed round / Seed stage

Seed funding, also known as a seed round or seed stage, is the first official stage of raising capital for a startup. It typically involves seeking investment from friends, family, or angel investors to get the business off the ground. The government decided to provide seed funding programs to help promising biotech startups access early-stage funding and support.

Seed funding is crucial for startups as it enables them to develop their ideas further and create a minimum viable product (MVP) that they can test in the market. This initial investment can be used for product development, marketing activities, and hiring key personnel. With government-supported initiatives providing seed funding opportunities for promising biotech startups, it has become easier for entrepreneurs to launch their businesses and gain traction in their respective industries.

9. Term sheet / Letter of intent

A term sheet or letter of intent is a typically non-binding document outlining the basic terms of a potential investment. It is an important step in the negotiation process between a startup and its potential investors. The term sheet will usually include information on voting rights, ownership percentage, and other key financial terms.

Once both sides have agreed to the contents of the term sheet, it becomes a binding agreement that outlines how the investment will be made. Before any binding agreement can be signed, however, the investor must approve the terms outlined in the term sheet. The process of creating a term sheet usually begins after initial discussions between the startup and investors have taken place, and both parties are interested in moving forward with negotiations towards an investment deal.

10. Value proposition / Value prop

What is a Value Proposition or Value Prop? It's simply the unique features that make your business products stand out from the competition. In other words, it is what you offer to attract investors and proposition organizations to do business with you.

For a B2B startup, having a clear and compelling value proposition is crucial in order to differentiate yourself from other players in the market. By highlighting your unique strengths and benefits, you can convince potential customers that your product or service is worth investing in. So if you're looking to create a successful B2B startup, make sure to craft a strong value proposition that clearly communicates why your product or service is the best choice for businesses.

B2B sales vs. B2C sales: what’s the difference?

B2B sales and B2C sales might seem similar at first, but there are significant differences between them. B2C sellers usually focus on selling products directly to the end-user businesses, while B2B sales involve selling products to other businesses that will use them in their own processes. In a B2C business like an online store where you're buying clothes, the individual customer is the final consumer.

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One of the main differences between B2B and B2C sales is the higher average transaction and higher price tags involved in B2B sales. Moreover, B2B salespeople usually have to deal with a longer sales cycle compared to their B2C counterparts. Unlike impulse-based purchases buyers make in a typical b2c world, b2b sales involve more complex buying criteria unlike b2c buyers who often make final decisions based on personal preferences.

Another difference between these two types of transactions is related to pricing structures. In general, consumers generally accept the stated price in a b2c transaction; however, b2b sales pricing is typically settled through negotiation by both parties. Additionally, b2b payment processing requires specialized systems due to issues like POs (purchase orders) or net-30 payment terms that are not common in b2c transactions. Finally, it's important to keep in mind that b2b customers are not driven by emotion when making buying decisions as opposed to b2c customers who may be swayed by advertising or branding efforts.

Frequently Asked Questions

What are business terms and phrases?

Business terms and phrases refer to the specific vocabulary used in the corporate world to describe various concepts, processes, and activities. They are essential for effective communication and understanding within the business environment.

What are the steps to a successful B2B sales process?

The steps to a successful B2B sales process include identifying potential customers, building relationships, understanding their needs, presenting solutions, negotiating terms, and closing the deal. It is crucial to have a well-defined sales strategy and effective communication throughout the entire process.

What are some common startup terms?

Common startup terms include MVP, runway, equity, burn rate, and seed funding.

What is business jargon?

Business jargon refers to specialized language that is commonly used in the business world. It often includes technical terms, acronyms, and buzzwords that can be confusing to those outside of the industry.

What skills do B2B and B2C salespeople need?

B2B and B2C salespeople need excellent communication skills, strong product knowledge, and the ability to build relationships with customers.

Gordon Vannoni

Gordon Vannoni

Writer at English Quest

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Gordon Vannoni is an experienced blogger who writes on a variety of topics, including lifestyle, technology, and finance. His work has been featured in numerous publications, and he is frequently sought after for his expertise in these areas. A creative thinker with a passion for writing, Gordon has a knack for crafting compelling stories that resonate with readers.

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