Startups Dictionary: terms that every entrepreneur should know

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César Álvarez's picture
César Álvarez
· 29/11/2015

"The Business Angels no longer invest in freemium, we must swing to generate more traction and go for another round."

Have you ever heard phrases like this and you've gone completely mad? If yes, it’s because you are not fully familiar with the terms used in the world of startups, so we’ve created this dictionary of words and expressions to entrepreneurs:

Accelerator

It’s an organization that helps startups to start its activities and seek for investment. They usually have convokes, support programs with fixed term and have mentors who advise entrepreneurs.

Actives

Goods a startup owns and whose value can be quantified.

B2B (Business to Business) 

Companies engaged in selling services to other companies and not to individuals.

B2C (Business to Customers) 

The opposite of B2C, they are companies that sell to private consumers.

Break even 

Also known as neutral, or breakeven. It’s the amount by which revenues are equal to the costs and from which benefits are obtained.

Benchmark

In Spanish, the translation is "punto de referencia". It is a parameter that is set to measure the growth of a startup. For example: annual profit, annual turnover, countries where it has a presence, etc.

Board of directors

The forever Board. The group of people who supervise the company's business and strategic decisions involved in it.

Bootstrapping

This concept is used when it is undertaken with very few resources, without large capital investments. In Spain we specialize in making bootstrapping.

Bridge

A quick loan to go pulling while getting the bulk of the funding.

Business Angel

A person who invests in a startup providing money, business experience and contacts that will help the growth of the company.

Canvas

Kind of summarized and simplified business plan where the business and the startup strategies are explained in a simple way easy to understand.

Elevator Pitch

It introduces a business idea in a Little time, it’s like the time a ride in an elevator lasts.

Exit

It’s the moment where you get out of the shareholding of a society. “Make an exit” is about selling your shares and, if possible, make money with it.

Family & Friends

It’s when the first round of financing is got through family and friends, which is very risky because if you screw it up, you may not be able to return to the neighborhood in a long time.

Fundraising

Raise a capital through donations or contributions from third parties.

IPO (Initial Public Offering) 

It’s when the startup come out of the stock market by selling its shares publicly. In that moment it stop being a startup.

Lead investor - Investor Leader

The investor who puts more money in a round of financing for a startup.

Lean Startup

A startup is launched to the market quickly along with a basic product or service to test whether the idea works or not.

Mentoring

An expert person (mentor) helps and teaches an entrepreneur to launch his project.

NDA - Non-Disclosure Agreement

It’s a contract of confidentiality between two parties that protects the information handled in any agreement.

Networking

Expanding the network of contacts through meetings, events, parties or alike to generate new business opportunities.

Outsourcing 

Outsource a service to another company or entity (as a freelance) rather than its own resources. For example, hiring another company to entrust a job instead of hiring employees.

Pivoting

To change the strategy of the company to adapt to changes according to the demands of the market.

Proof of concept 

It’s a demonstration that the project can be carried out. It’s usually a functional prototype that resembles the final version as close as possible.

ROI (Return of Investment) 

Amount of money that the investor makes after selling its stake. Everything has to do with this; you buy low and sell high, in order to obtain a ROI as high as possible.

Seed - Seed Capital 

It’s the first round of funding that allows us to start the business from scratch. The money usually comes from near the entrepreneurial circles.

Startup

It’s an early-stage company with a big growth potential. Usually technology-related companies.

Unicorn

It’s a startup that without going public, it’s valued at over one billion dollars. The Unicorn Club is the list of these companies.

Venture Capital - Venture Capital

Investment by a company or private equity fund in a startup. These funds work with money from others that have put their money in the fund to try to make a profit of the same investments.


And now, let’s go over a few words related to internet startups:

Agile

Software development methodology that aims to optimize the resources allocated to a project and accelerate its accomplishment.

Big Data 

The branch of computer science that is responsible of managing and analyzing large volumes of information, normally in real time.

Crowdfunding 

Financing a project through joint ventures and in a public way through websites created for this purpose. Normally rewards are delivered depending on the money contributed.

Crowdsourcing

Outsourcing a project to be developed by a community of persons or entities. It is usually done through an open call and the community makes contributions to it.

Responsive web design 

Development method that allows the design change and adapt to the different types of screens on the market. For example, to display a form on a mobile and another on a monitor 27 "always optimizing for each screen size.

Freemium

Internet pricing model which offers you something for free and if you pay extra, you get the (Premium). For example, the typical directory that seems to be free but if you pay, it’s shown above others and with more information than the rest.

Gamification

The art of applying features of games like score, competition, prizes, etc. To another type of online business for engaging the user or client.

Geomarketing 

To use geographic information to improve marketing. For example, knowing where a search is performed to provide closer results.

Growth Hacking

Techniques for growing a startup quickly based on creativity and analytics.

To reiterate

To repeat a business process by changing parameters until it works.

Traction

To generate real data to validate the demand for the product or service from a startup and demonstrate that it can grow very quickly and generate a great profit.

Disruptive technology

Technology that appears to change the rules of the market.

Spin-off

In a video game or a TV series is a spin off a derivative that is based on a minor character from the original stuff. For startups world is more or less the same, it is a company created by another company, often to save part of the business which operates or may operate and separate it from the one that is not working.


So far, we’re done with the glossary on the startups world. If you're planning to undertake, take or maybe you have already done, we can only wish you good luck and a good tip we could give you is to watch the best Spanish startups of 2015, they can give you some keys to success.

 

Main photo: Mikito Tateisi
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