Commonly used terms in startups
In this blog post, I would like to share some commonly used startup terms i.e. Startups dictionary which can help an engineer to deal with business people. Let’s start :)
1. Angel Investors
People who invests without knowing any business model and revenue
2. ARPU (Average revenue per user)
Measure of the revenue generated per user or unit and is equivalent of total revenue divided by average users during a period
3. Acqui Hired
Startups resources and you will be hired by another startups to build their ideas or we can say turning any new ideas to reality.
4. Acquisition
Somehow your startup company can be acquired by other players in the industry.
5. Alpha Testing
Before a launch, you tell your employees about a new feature which needs to be tested
6. Beta Testing
Launching a new feature to everyone, company test a feature with specific audience but not limited to company members.
7. Bootstrapping
The startup is funded by family, friends and acquaintance
8. Burn Rate
You lose money every month as loss is called burn rate
9. Business Model
Bhav copy which shows month-on-month, quarter-on-quarter or year-on-year will show revenue, expenses and profit/loss with forward looking projection as well past data
10. Business Plan
It Includes product strategy, who are its consumers, go to market strategy, competing with the product b, c and so on, valuation to convince business about your startup
11. Cap Table
Name of the share holders with ownership percentage they have in your startup company. This will help when you raise a capital with other investors
12. Churn
At what rate you are loosing your existing customers at the time of evaluation period
13. Cliff
Is related to employee of a startup which is a time period after which you will be given ESOP’s. In India, It is generally one year that an employee has to work for a startup
14. Conversion Funnel
What steps your customer follows to become a companies paying customer. Different strategies are implemented by the marketers on acquiring customers. Also, through an inorganic search, a customer can become a paying customer which in-turn helps in building conversion funnel
15. Convertible Note
It helps in financing and investment and it is basically an investors money is turned into equity however at the time of investors or the founder don’t know the exact valuation of the company
16. Customer Acquisition Cost
The cost required to acquire a new customer
17. Customer Segment
Tells you about which type of customers you can target with your business
18. Daily Active Users (DAU)
If you have a B2C product, then how much active users per day your app is being used. You can get active users on weekly/monthly basis as well
19. Dragon
A startup raised 1 Billion in one funding round
20. Equity
Equity means stocks of a company/startup
21. ESOP’s
Employee Stock Option’s are that every startup gives an employee the right to purchase the stock options even before the IPO Launch
21. Exercise Period
When you will leave a startup, how much time you will get to convert those ESOP’s into actual stocks(even do a little more research on this)
22. Exercise Price
ESOP’s are not free, a company set an exercise price so that an interested employee can buy the ESOP’s at the time of working in the startup. Generally, ESOP is equivalent to ₹10. Also, A public listed company can give you discount at the time of joining the company
23. Exit
An investor want to exit from your company and looking for profit/loss as per companies performance after a certain period of time. It can be acquisition, merger or a sale.
24. Freemium
Some features are listed as free and for rest feature, A user has to pay the price as per the business strategy
25. Gross Merchandise Value ( GMV )
Mostly used in E-commerce, cumulative value(MRP) of a product
26. Go To Market Strategy ( GTM )
Your product can be sold in chosen customer segment only with right GTM as people are not eagerly waiting for your product :) For example, on how to ship the product, how customer will know about the product, how customers will pay and give feedback
27. Incubator/Accelerators
A place where your business nurtures in a way in initial days. Learning, Ideation, Coaching, initial funding is such an example.
28. Initial Public Offering ( IPO )
A point where a company make an exit to become a public listed company in stock market
29. Landing Page
A page on which a user lands after clicking on an ad
30. Life Time Value ( LTV )
For how long you can make sure a customer will stay loyal to your business after acquiring them. It’s an important metric to study about a customer
31. Minimum Viable Product ( MVP )
It does not have lots of features but a user can perform accurate action which in turn serve the purpose of business and needs of a customer
32. Mover Advantage
Not every startup that you see is the first to market startup. Point that out to the investors and convince them too as it comes with its own disadvantages :(
33. Pitch Deck
A presentation for pitching about the problem in the specific market you are focusing on and how you solved them with your entrepreneur skills to the fundraising company
34. Pivot
God forbids if something goes wrong in the current business, you can focus on other business in which you have strong expertise and this can become another separate business
35. Pre Money Valuation
Investors evaluate your companies worth before giving out the investment money to a start-up/company
36. Product Management
A business sense is needed to become a product management. You should resolve the gap between what consumers want and what engineer thinks in order to release the product or shipped
37. Retention
At what speed or percentage your original customer come back to purchase the product again.
38. Revenue Model
How your startup will earn money
39. Run Rate
What will be revenue in next year according to the current data. Try to find annual run rate correctly
40. Software As A Service ( SAAS )
A customer will use your service on monthly fees
41. Seed Fund
This funding comes after angel investing and it gives you an organised investing like Institutional
42. Series Of Funding
Series-A, Series-B, Series-C and so on after seed funding in the form of institutional capital or formal capital. It can be of 5 million, 10 million etc.
43. Sweat Equity
Equity is given without money as you have given your time and expertise in the startup and usually given to mentors or advisors
44. Term sheet
A document given by the investors to the founder/member of the company
45. Traffic
Multiple users visiting your website/app on daily/weekly/monthly basis
46. Unique Selling Point/Proposition ( USP )
The essence of what makes your product or service better than competitors
47. Valuation
Worth of a company
48. Value Proposition
The product/business you are building but what value you are giving to the customers which will solve the problem
49. Venture Capital
All of the capital raised by the startups/company
50. Vesting
An employee will get all ESOP’s in a systematic period of time. In India, It’s generally 4 years.
Stay tuned :)
