30+ Startup Terms You Need to Know Before Starting a Business
- Last Updated December 21, 2023
Suraj Shrivastava
Chief Link Building Strategist
Chief Link Building Strategist
Are you scared of using slang language at business meetings and making a fool of yourself?
Or worse, fumbling at parties and losing important connections?
Learn these 31 startup terms and get your foot inside the door instantly!
Starting a business comes with many hurdles including not knowing the frequently used startup terms and lingos. Investor meetings and billionaire business parties require you to show that you ace your startup idea.
Business owners with an actual MBA or finance degree know endless abbreviations and also judge your knowledge based on whether or not you understand these startup financial terms.
In this blog, we teach you 31 startup terms you can not avoid learning if you want to succeed in business.
An angel investor is a person who invests his personal funding in the startup if he/she sees potential and a high return rate in the startup’s idea and vision.
They are usually the first to invest in the company and provide the entrepreneur with the money to lift their company from the ground.
More than 80% of startups start through bootstrapping. Some business idols would also argue a close 95%. But what does it mean, you ask?
Bootstrapping is when a founder decides to use his own savings and loans from friends and family to get their business started. This allows them the time to focus on the startup and not on finding funds and investors.
Some also start with bootstrapping and eventually raise funds during their growing stages.
A wantrepreneur is a startup terminology that will almost make you giggle. It is a person who has an idea (or many ideas) to launch a startup. Some people always remain wantrepreneurs, a thing you must refrain from!
An accelerator is an organization that nurtures startups during their initial stages by providing the right mentorship, space, resources require to start, and in some cases even funding. They mother your startup babies until you are ready to help them grow yourself.
It is a crucial startup financial term to know if you are someone who needs funding for your startup and don’t know where to start.
If you are the founder of a startup, this startup terminology is likely going to be discussed a lot. Burn Rate is how fast you’re burning your money until you run out of capital completely, in a set time frame.
Investors refrain to attach their money to people who spend their capital at a very high rate before receiving any returns. If this startup term gets associated with your business, it’s time to step back and take it slow my friend!
SaaS is a startup terminology you must be hearing everywhere these days. But no need to beat your head to understand it, it is as simple as it can get. SaaS or software as a service is one of the most common business models, meaning that their software is provided on a monthly payment basis, just like monthly subscriptions.
Some examples of successful SaaS business models are Zendesk and Salesforce.
The Securities and Exchange Commission describes an accredited investor as, “A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or a natural person who has an individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person.”
Basically, it is someone with a lot of money who can easily invest in your startup ideas. It is important to get familiar with this startup financial term to get hold of such investors easily.
A bridge loan is a short-term loan ranging anywhere from 2 weeks to 3 years. It is like secondary support to your funding and helps keep your foot off the ground in the initial stages of starting your business.
If you are just starting, many people will introduce this startup terminology to you, encouraging you to create the minimum viable product. It is basically an idealogy to avoid spending lots of resources trying to build a product that may or may not survive the cutting-edge market eventually.
It means building the first version of the product with the main features you aim to provide and leaving the upgrades for a later time to test its viability in the present market.
The beginning startup energy is always a pleasure to watch and have. How difficult it is to find new talent for your startup and build a business with highly skilled labor! However, sometimes these startups do not grow at the rate they ought to.
Thus, bigger companies buy out these startups just to acquire their skilled labor – human resources. This startup term is quite famously used by bigger companies and is thus important to know to help you understand who is buying out who in the market.
Churn Rate is a startup term used to calculate the number of subscribers discontinuing their services within a given time frame. The growth rate must exceed the churn rate of the company in order to make it a success in the market.
This is the goal of every startup company. Scalability is when a business model serves time and again, with little upgrades, to serve a large and engaging audience.
A scalable business is a business that can serve thousands of users at the same time without needing the same number of technical assistance.
A scalable startup model is tested in its initial stages to understand if the product or service they are providing can cost-effectively reach its target audience.
Have you seen people often making minor changes in their business models or products to suit their target audience demand even after the launch?
Iteration is a startup term used to understand how business owners often diverge from their initial ideas to produce something better suited and easily scalable in the market.
These initial changes after the launch of the startup business are called Iterations.
Have you heard the phrase ‘Fail Fast’? Let us tell you why this phrase is an on-point strategy if you want to scale your business faster.
Surely you have seen people be extremely confident in their idea, only to find major defects in the key marketing strategy, target audience, product, or business models. When business owners change these core elements, it’s called pivoting.
It is always recommended to pivot and iterate whenever required and not rely on the wrong strategy to eventually work. For the same reason, it is not wise to spend too much time and money building the ‘right’ strategy.
Just start, build, test, and adjust.
A startup terminology you will often hear with big companies is cash flow positive.
This is when your incoming money is greater than your expenses or outgoing money. It is a crucial indicator of a successful business model.
This is an important startup term to understand to build an efficient business model for your startup. A Cliff applies to vest schedules, which in basic language means shares given to an employee of the company over time.
It is a period of time, usually 1 year before the employees can avail the benefits of their shares in the company.
Investors can also use this on CEOs to make them stick around for a longer time.
Many a time it so happens that employees are fired just before they get to receive their equity stake. However, you must refrain from this malpractice for your own reputation.
Crowdfunding, a startup financial term you must have heard everywhere, is the method of using established platforms such as Indiegogo, GoFundMe, and Patreon to have people fund your business to help lift it from the ground in its initial stages.
As the company grows, you share a set % of your profits with your crowdfunding portal and thus do not have to share your company’s shares to acquire investments.
Ever heard of people talking about how their early adopters helped them SO much in their initial business stages?
You can not miss out on this startup terminology if you are starting your business.
An early adopter is usually your first client, a person who gets to try your product or service long before it reaches the market. They provide you with valuable insights and honest feedback to help you make the desired changes before it hits the general public.
We hear the word ‘storytelling’ almost everywhere these days. Obviously, it’s not a “Once upon a time, there was a King….” story.
It is in a context where brands use this tactic to influence and allure the target audience into viewing the brand as a personal entity.
Advertorials is a startup term that means running paid campaigns with a story-like view to generate revenue.
Bloggers use this term more often, as they are the ones running these advertorials.
An exit strategy is a startup financial term that deals with either the liquidation of a financial asset or the selling of a business in order to gain more profits for the investors.
It a generally carried out by business owners, venture capitalists, or investors themselves.
It includes the entire strategic composition of when to sell the business, to whom, and for what value.
Freemium is a business strategy generally used by SaaS companies. It provides users with a free version of the service for a said period of time in order to allure them into buying the paid versions or upgrades to enjoy the additional features of the product.
Some examples are Spotify, Canva, and Netflix.
Surely, if you have got yourself in a business circle, you’ve heard how people are ‘taking their company public.’
Going Public is a startup terminology indicating the notion of a company putting its stock in the market allowing people to invest and buy stocks of the company in order to receive higher returns in the future.
This is the same as investing, the difference being that people who acquire the stocks of the company will own portions of the company.
Same as accelerators, Incubators provide mentorship, resources funds, and more, the only difference being Incubators are long-term solutions to your business needs.
While accelerators are speedy, Incubators also provide a co-working space and help overcome the early onset needs of your startup baby.
So if you are looking for long-term assistance to run your startup business, Incubators is the startup term you must never forget!
A startup term everyone has surely heard of, at least in one of those business-savvy web series. Every business needs professional mentorship and guidance to help make efficient business decisions.
The Board of Directors are the experts, who can help make wiser business decisions, assist with hiring, founding partners, and more.
The Board of Directors is extremely crucial in a business’s success (or failure). Thus, it is a must to have an efficient, specialized group of people on your Board of Directors.
This is crucial startup terminology to understand if you are starting a B2C or business-to-consumer company.
Consumer Proposition are the products ideally to be used by individual customers to satisfy personal needs and are not valuable to enterprises.
For eg, Dermaco sells sunscreens meant to be used by individuals to protect their skin from the ultraviolet aging effects of the sun.
Every company has that one employee who always goes above and beyond their set role to impress their managers or the founders in the case of startups.
These people who are your company’s biggest fans and love their roles in your company are called Evangelists.
Growth Hacking is a startup term used by Seal Ellis for the very first time, to describe how businesses use unconventional methods to market and scale their businesses when they do not have the funding to carry out traditional marketing strategies.
Growth Hacking is innovative, intelligent, and cost-effective.
For eg, using social media ads to market your product to the target audience.
Airbnb is one such example that marketed its services by themselves clicking pictures and posting them online to attract an audience.
This startup terminology is a business tactic we have all been trapped into at least once in our lives.
Loss Leader Pricing is a deliberate method of selling your products at a lower rate than the industry market to entice your customers to buy your products and also become returning customers with time.
Recently, Zudio, a clothing brand is using this tactic and has acquired several returning customers, cracking the market like none other!
Inbound Marketing is a startup term to describe marketing by creating valuable content across the internet allowing people to notice your online presence and sign up for your services.
This can be done by writing SEO blogs, social media content, tutorials, educational video training, podcasts, digital infographics, and more.
It is surely time-confusing yet is a widely used method in businesses.
Inbound Marketing could also be achieved by word-of-mouth marketing from satisfied customers.
Outbound Marketing is an inferior marketing tactic of pushing your products to the customers instead of them coming to you. This can be achieved by running social media ads on platforms like Instagram, Facebook, and YouTube.
It is less time-consuming and also a faster way to generate sales.
Sweat Equity is a startup terminology used to describe the human resource a company has in the initial phases of starting and running their business.
In the initial stages of starting a business, it so happens that companies are unable to provide attractive salaries to their employees. In a way, employees are risking their careers by working in these startups.
However, they can be paid in non-monetary investments. Thus, it is a great tactic to use to attract fresh talent.
A unicorn startup is a company with a valuation of $1 billion or more. The term was coined in 2013 by venture capitalist Aileen Lee to describe the rarity of such companies.
Unicorn startups typically focus on technology and have experienced rapid growth, disrupting traditional industries with their innovative products and services. Furthermore, they may have a large user base, significant revenue, and a strong market position.
Uber, Airbnb, SpaceX, and WeWork are some examples of unicorn startups. Nevertheless, achieving unicorn status is not a guarantee of success, as some companies have not been able to sustain their growth or have suffered significant setbacks.
Now that you are well acquainted with the common startup financial terms, you can rest assured that the path to entrepreneurship will be lighter than before. There will always be leaps and bounds in business, however, knowing the lingo will help you ace the next investor meeting or that business party you’re so scared to attend.
Suraj Shrivastava at ForgeFusion shares simple, effective ways to grow your business using SEO, content marketing, and AI, learned from helping over 50 companies. When he's not working, he loves teaching others or watching documentaries.
