A
A/B test- It is method of comparing two versions of webpage or app to similar visitors at the same time. The one that gets better conversion rate wins.
A Round Financing- It is company’s first significance round financing by private equity investor or venture capitalist.
Above market cost- Cost of product or service that is costlier than its competitors
Above ground risk- It is a non-technical risk. Usually associated with markets, political environment or prices
Absolute advantage- It is the ability to produce goods or service at lower cost compared to other entity produces that good or service
Acquisition- The action in which company buys most, if not all, of the target company’s ownership stakes. It’s the act of acquiring or gaining possession.
Acquihire- It is buying out a company primarily for the skills and expertise of its employees. Rather than for the product and services it offers
Acquired Knowledge- It is knowledge acquired from external resources that can be hired or purchased.
Accelerator- Fixed-term programs that provide training, advice and mentorship to entrepreneurs and culminate in public pitch event and demo
Ad hoc- It refers to a solution designed for a specific problem or task.
Add-on-service- The non-monetary service provided by venture capitalist, such as to assemble a team or help company to prepare for Initial Public Offering (IPO).
Addressable market- Also called as total available market, where the revenue opportunity is available for product or service.
Affiliate Marketing- It is the act of earning commission by promoting other company’s or people’s product. You like the product, you promote it to other and you get a piece of profit.
Agile- It is the method of managing the design and build activities for information technology, engineering and other business areas to provide new product in highly flexible and interactive manner.
Alligator arms- A state in which someone is unable or afraid to go and work outside of their comfort zone.
Alpha test- It is the common software testing strategy used in software development to identify defects in software product to ensure quality of the product.
Always Be Closing (ABC)- A sales strategy in which a salesperson is always looking for new prospects and pitch product or service to those prospects.
Analysis Paralysis- A state of over-thinking about a decision, that it becomes difficult to take a decision.
Angel investor- They invest in early stage or startup companies. Angel Investors are usually found among entrepreneur’s family and friends.
Annex fund- They are side funds that can provide extra pool of money to support existing funds. They are usually raised during slower economic times when raising large scale funds is difficult.
API- Application Programming Interface is a set of protocols, routines and tools for building software application. It allows two software programs to communicate with each other.
A-player- Employees that are considered to be the best by their organization.
Average revenue per user- It is the total revenue divided by number of subscribers.
B
Balance sheet- It’s a financial statement that lays out company’s assets, liabilities and equity accounts till the date as reported.
B2B- Business to Business is the company that provides services to other companies.
B2C- Business to Customers is the company that provides services for individual.
Bear Hug- An offer by a company to buy shares of another company at a much higher price than what the company is worth.
Benchmark- It is the process of comparing one’s business processes and performance metrics to industry best practice from other companies.
Bond- It is a debt instrument that is issued for period of more than one year with purpose of raising capital by borrowing.
Bootstrapped- A company is bootstrapped when it is built without use of outside money. It is funded by entrepreneur’s personal resources or company’s own revenue.
Beta Test– It is the last stage of testing. It involves sending or offering the product for a free trial in order to detect any flaws.
Blue sky law- It is the state of law in United States that regulates offering and sales of securities to protect the public from fraud.
Blue chip- They are the large, established and successful companies. They are the companies that have stable earnings and do not have extensive liabilities.
Blind pool- A limited partnership or stock offering without specifying how investor’s money will be spent.
Bridge financing- It is a method of financing used by the companies before their IPO, for maintenance of current operations by obtaining necessary cash.
Braindrawing- A type of visual brainstorming in which group of individuals sketch ideas.
Brainwriting- It is similar to brainstorming. The general process is that all ideas are recorded by the individual who thought about them.
Buy-and-sell agreement- It is a legal agreement between co-owners that provides for future sales of your business interest for your co-owners to buy it.
Burn rate- The rate at which company uses its capital. It is usually quoted as monthly rate.
Business Model Canvas– It is a canvas presented in graphical or textual way, that allows you to describe and design your business. This includes customer segment, value proposition, key activities, key resources, customer relationships, channels, cost structure, revenue structure and Key partners.
Business Plan- A legal document including factors critical to your business purpose and goals. It includes, company profile, revenue model, marketing strategies, market problem, proposed solution, technology and financial data.
Business Intelligence- It is a technology driven process for the acquisition and transformation of data into meaningful information for purpose of business analysis.
Buyout- It is the act of buying all the company’s shares and getting control of the company.
C
Capital- Capital is the amount of cash and other assets owned by the company.
Cash flow statement- A statement that details total amount of inflow and outflow of money in business.
Chicken and egg dilemma- It is a situation in which two factors can flourish. For example, users are necessary to create a content to attract more users.
Call-to-action– It is an instruction or words that urge reader, listener or viewer of a message to take an immediate action.
Cloud- Cloud is a network of remote machines that lets you build and host websites and applications, store and analyze data.
Capital expenditures- Money spent by a company to add or expand plant, property or equipment, that will benefit for a long period of time.
Convertible debt- Company borrows money with intent to repay the lender with stocks instead of cash.
Conversion funnel- It is a journey through which individual discovers a product and turns into a customer by buying that product.
Cohort Analysis- It is a method that analyze and enable you to compare how different groups of customers behave over the time.
Cost of goods sold- It refers to the direct cost attributable to the production of the goods sold by the company. For example: cost of the materials used, labor cost etc.
Cost structure- It is a method to determine how much it will cost a company to produce or manufacture a product and how much profit a company will make by manufacturing a product.
Crowdfunding- It is a way of raising money for a project or business venture by asking large number of people each for small amount of money
Current Assets- Assets that will be turning to cash within one year
Current Liabilities- It is an obligation that is payable within one year
Customer life cycle- It describes series of steps customer goes through when considering, purchasing and using a product.
Customer segments- It is dividing customers into groups of customers with similar characteristics. It is done to determine what customers want or what are their needs.
D
Daily Active Users- It is to measure amount of users using service or product in 24 hour period
Data Mining- It is the process to analyze data from different perspectives and summarize it into useful information
Date of issue- It is a date on which stocks of the company become publicly available to trade and purchase
Deck- It is the slide-based presentation that can be transferred digitally
Deep Bench- It refers having hard working and smart team and not only relying on the founders.
Deal flow- The rate at which Funding institutions receive business proposals/investment offers
Debt- It is an amount of money borrowed by one party from another
Debt Financing- It is when company raises money for working capital by selling bonds, bills, notes to individual or investor
Direct Marketing- It is a form of marketing in which company communicates directly with the customer through cell phones, email, websites etc.
Disclosure- It is providing all the relevant information about the company that may influence an investment decision
Discoverability- It is an ability to find how user will learn about the product
Dividends- A payment or distribution of company’s earnings to the stakeholders
Double Trigger Acceleration- It is a two-step requirement i.e. the change of control and the act of being fired by the company.
Drive-By VC- A venture capitalist that invest in startup but takes little or no role in managing it
Due diligence- An investigation of a person or the business before signing a contract
E
Early Stage- The company that has completed its seed stage. It has a team, minimum revenue and company is in early stage of development. They could be in the process of making new product or may have a product that is available in the market.
EBITDA- Earnings Before Interest, Tax, Depreciation and Amortization. It shows company’s financial performance. It is calculated as Earnings Before Interest, Tax, Depreciation and Amortization divided by Total revenue.
E-commerce– It is trading or buying and selling of goods and services on the internet.
Economies of scale- It is when more units of goods or services can be produced on large scale with less input cost.
Employment terms- The terms and conditions that both employer and employee agree upon for a job
Enterprise- Enterprise simply is another name for business, company or firm.
Entrepreneur– A person who organizes and manages enterprise or business with some initiative and risk.
Equity Financing- It is a process of selling of an ownership interest or shares to raise capital for business purpose.
Exit- To sell or exchange large amount of company’s ownership for cash, debt or equity of another company.
Exit Strategy- The method by which an owner gets out of an investment made in past. It includes Initial Public Offering (IPO) or being bought by large player in the market.
F
Fablab- A small-scale workshop where the startup hardware firms build their first product prototype
Failing Forward- It is learning from the mistakes made in past for building more successful product.
Financial Statement- The term describes company’s balance sheet, cash flow statement and income statement. It is a formal record of financial activities.
First mover advantage- It is an advantage that company gets by being first to enter specific type of industry or market.
First stage capital- It is the money provided to business or entrepreneur who has the proven product to start commercial production and marketing.
Fixed Assets- The assets that are purchased and used for long term and cannot easily be converted into the cash
Fixed Costs- A cost that remains unchanged irrespective of the output or sales revenue. Example salaries, rent being paid etc.
Flipping- The practice of buying shares at the offering price and reselling them for profit
Freemium– It includes two words ‘free’ and ‘Premium’. A business model where core product is offered for free and then charge for premium features.
Future Value- It is the value of an asset at specific time in future.
G
GAAP- Generally Accepted Accounting Principles. It is a set of accounting principles and standards used by companies to compile their financial statements.
Gamification- Applying game design techniques and principles to a non-game service in order to increase user engagement.
General Partner- A person who joins another person to form a business. The General partner is active in day-to-day business activities.
Growth Hacking- It is a technique to attract users and grow customer base via unconventional means. Generally used by startups with limited resources.
Go-to-market strategy- The plan made by a company by using its internal and external resources to acquire market share.
Ground Floor- The earliest phase of startup or venture. It has investment opportunity and cost of entry is lowest.
Gross Margin- Difference between total sales revenue and cost of goods sold, expressed in form of percentage.
Gross Profit- It is the net sales minus cost of the goods sold to get the final result on how much business earns from sale of its goods and services.
Note: The only difference between Gross margin and Gross profit is that the gross margin is in percentage form, while gross profit is in absolute amount
H
Hackathon- Also known as Codefest, it is an event in which computer programmers, software developers and hardware developers collaborate intensively on software projects.
Herd Mentality- It describes how people are influenced by their leaders to adopt certain behaviors, instead of thinking independently.
Herd Mentality- It describes how people are influenced by their leaders to adopt certain behaviors, instead of thinking independently.
Holding company- The company that owns’ other companies’ stocks. It refers to the company that does not produce goods or services, its purpose is to just own the shares of other companies to form a corporate group.
Hourly Active Users- It measures user engagement. Amount of users in 60-minute period.
Hybrid Viral Model- Dividing customer gained by viral marketing campaigns, with customers gained by other means of campaigns such as Search Engine Optimization (SEO) or paid search.
I
Indication of Interest (IoI)- It measures investor demand for Initial Public Offering (IPO). It is non-binding interest in buying securities that are currently in registration process.
Incubator- An organization that help develop early age startup companies by providing services such as building management teams, providing management training and office space.
Initial Public offering- It is the first sale of stock by the company to public. IPO is issued by companies to gain money in order to expand.
In-App Purchases– The purchase of goods and services from mobile application.
Income Statement- It is the statement that includes sales, expenses and net profit over the particular period of time
Inside sales- The sale of product where sales person does not meet customers face-to-face. The sale is made online or on the phone.
J
Joint Venture- A business agreement in which two parties agree to work together for a finite time and share the expenses and profit of particular business
J-curve- The curve is J-shaped; it shows company’s profitability on a customer relationship over the time. With time on x-axis and customer on y-axis.
k
Key Performance Indicators- It is a type of performance measurement that indicates how company is performing to achieve key business objectives.
Key employee- It refers to a co-founder and company employee who are key to the success. They are considered very important part of the company and often rewarded with equity
L
Lead Investor- Lead Investor is the venture capitalist or investor who invest money in the company or the one who contributes largest amount.
Lean (method/startup)- The term was first used by Eric Rise, it is a way to quickly and cheaply develop efficient, revenue generating product.
Letter of Intent- A document that outlines terms of a deal and serves as an ‘agreement to agree’ between two parties.
Leveraged Buyout- A company or a segment of a company purchased with combination of equity and amount of borrowed money.
Liability- A company’s legal debt or obligation while conducting business operations. They are included in the balance sheet. Example, Loan, mortgages etc.
Licensing- It is the process of leasing a legally protected entity; name, logo, trademark. The entity is known a property or intellectual property.
Limited Liability Company (LLC)- It is a company structure where members of the company cannot be held personally responsible for company’s debts or liabilities.
Limited Liability Partnership (LLP)- It is a type of partnership in which all the partners have limited liability (depending on the law)
Liquidation- It is a process by which company is brought to an end or dissolved by selling off its assets.
Low hanging fruit- It is doing the simplest and easiest work first. It’s an easy-to-capture opportunity
Long term liability- Obligations of the company that are payable over a time exceeding one year
Logo– It is a graphic design associated with the company or product.
M
Market Capitalization- It is the total market value of outstanding shares of the company.
Mergers & Acquisitions (M&A)- A merger is the combination of two companies to form a new company, while acquisition is acquiring of one company by another company.
Mentor- Some senior or more experienced person help or gives advice to a young or less experienced person, especially at work.
Minimum Viable Product (MVP)– It is a version of a new product that offers a team to collect maximum amount of validated learning about customers
Micro VCs- It is money invested in early stage emerging companies with amount that is less than that of traditional venture capital.
Mind Map- It is a diagram created to organize information. Created around a single concept, major ideas are connected to the single center concept and other ideas branch out from major ideas.
Monthly Active Users- The number of users who engage or use service in a given month
Monetization– To monetize is to convert something into money or legal tender. It means to convert an asset into cash.
Mutual Fund- It is professionally managed investment companies that pools money from investors and purchase securities such as stocks, bonds, money market etc.
N
Native Application– It is an app that is developed specifically for one platform or device and can take full advantage of the features in that device.
Net Asset Value- It is the value of company’s assets minus value of its liabilities.
Non-disclosure agreement (NDA)- Also known as Confidentially Agreement (CA), is a legal contract between two parties with respect to disclosure of certain proprietary and confidential information.
Network Effect- It is created when a good or service becomes more valuable when more people use it. In other words, effect that one user of the product or service has on the value of product to other user.
Net Income- It is company’s income minus cost of goods sold, expenses, interest and taxes during the same period.
Net revenue- It refers to gross sales minus cost of sales, including the cost of goods sold.
Net sales- It is the amount of sales generated by the company after deducting returns, allowances and discounts.
O
Onboard- To acquire new customers to establish brand loyalty
Open Data- Data that is freely available to everyone to use and publish as they wish.
Operating Margin- It is the ratio used to measure company’s pricing strategy and operating expenses. It shows how much revenue is left after costs of goods and operating expenses.
Option- It is a contract that gives buyer a right, but not obligation to buy or sell an underlying asset.
Operating Agreement- Under this agreement company’s owner and co-owner establish their percentage of ownership in Limited Liability Company (LLC). It includes share of profits or losses, rights and responsibilities.
Overhang- It is a situation where people have money holdings due to the lack of ability to spend them.
P
Pari Passu- It is a Latin phrase which means “with an equal step”. Equal in all respects, at the same rate, same proportion, same rights etc.
Partnership- It is a type of business relation or agreement where two or more parties or persons join to carry a business or trade.
Pivot- Act of a company or startup to quickly change direction with the business strategy.
Platform as a Service (PaaS)– A type of cloud computing services that allow customers to develop, run and manage an application on the internet. Customers don’t need to build or maintain typical infrastructure associated with developing and launching an app.
Portfolio Company- It is a company which is privately owned by a venture capital firm, holding company or buyout firm.
Product/Market Fit- It is an extent to which a product satisfies the market demand
Proof of Concept- The demonstration of a concept or an idea by the startup. Many VCs or investors demand proof of concept before making any investment decision.
Prototype- A sample product or model build to test a concept or process in order to learn and get customer feedback on the product.
Public Company- A company that has issued securities through an Initial Public Offer (IPO) and is traded on at least one stock exchange.
Purchase Funnel- It is a model which shows customer journey from awareness about the product or service to purchasing or buying a product.
Q
Quality Assurance (QA)– It is a way of preventing mistakes or defects in manufactured product or service, to make sure if right thing has been made in a right way.
Quorum- Minimum number of officers or members of a company who must be present to transact business legally.
R
Raising Capital- It is to obtain capital or money from investor or venture capital firm.
Registered Users- The number of users registered, who use product or service.
Repositioning- It refers to the major changes in a product to reposition it in the market, the firm has to change customer’s understanding of the product.
Retention Rate- It is calculated by measuring number of customers that company have retained over a given period. The number of customers who started using product from the beginning and continue using the product.
Return on Investment (ROI)– It is the benefit or profit the investor has gained by investing in a company or product.
Revenue- The income or amount of money that business receives from its normal business activities.
Release- Launching of a new product in specific market or user base
Request for Proposal (RFP)- A form of bidding process where companies bid on funding a particular project proposed by another company.
Risk Tolerance- The risk capacity or amount of risk an investor is willing to take before making investment decision.
Roadmap- A strategic plan or framework to achieve set target and objectives.
S
Software as a Service (SaaS)- It is software licensing and delivery model in which applications are hosted by a vendor or service provider for customers
Scalable- A business or product that is able to grow due to the market demand
Scrum- It is an agile method to manage a software development project. It reduces complexity to focus on building a software to meet business objectives.
Secondary public offering- Second round of issuing new stocks for public after Initial Public Offering (IPO)
Securities- Includes all types of equity and debt instruments.
Seed Stage- It is an early stage where a company or startup needs funding to do business
Seed Round- The first round of funding for startup. Usually the amount raised in seed round is used to produce prototype of a product.
Series A- The first round of venture capital funding
Search Engine Marketing (SEM)- A form of internet marketing where visibility is increased in search engine results
Search Engine Optimization (SEO)– Process of increasing a visibility of a site or web page by ensuring site appears high in the list of search engine results.
Social Media Monitoring- The activity to monitor social media channels for information about the company or organization. It is to see the reputation and how the company is perceived online.
Sprint- A set time period within which the work must be completed and ready for review.
Stakeholder- A person or a group of people who have an interest or can be affected by company’s actions, objectives and policies.
Startup– It is a newly established business in form of a company, a partnership or an organization.
Sweat Equity- The ownership interest or equity shares issued by a company for contribution of employee towards the development of a project.
T
Tag-Along Rights- It is a right that assures if the majority shareholder sell his stake in the company then minority stakeholder can offer their shares for the same amount.
Target Market- A group of customers that business has decided to aim its marketing efforts
Term Sheet- It outlines terms and conditions of a business agreement by which investor will invest in the company.
Time Value of Money (TVM)- The idea that money available at the present time is worth more than the same amount due to its earning capacity.
Traction- It refers to progress of startup company. A proof that people are actually using the product.
Trade Secret- It is a confidential business information which provides a competitive edge and has economic value due to its exclusivity.
Top of Mind Awareness (TOMA)- A brand or a specific product coming first to the customer’s mind when thinking about the particular industry.
U
Underwriters- It is a company or an investment bank that manage public issuance and distribution of securities of a company
Unicorn- It refers to any tech startup company that reaches $1 billion market value.
Unique Value Proposition (UVP)- It describes the benefit you offer, how you solve customers’ problems and what distinguishes you from the competitors.
User Acquisition- The process of bringing new customers to purchase company’s goods or services.
User Experience (UX)– It refers to a way user feels and behaves while using a particular product.
User Interface (UI)– It is visual part of computer or mobile application through which human-machine interaction will take place. It includes screen menus, icons, gesture movements etc.
V
Value Proposition- It describes how the product solve customers’ problems, why a consumer should buy a product or service.
Valuation- It is a process of determining current value of an asset or a company.
Venture Capital- It is a money provided by investor to startup, emerging and to the companies with long-term growth potential.
Vesting- It is a process by which an employee acquires rights over employer-provided stock incentives, employee’s retirement plan or pension plan and these are non-forfeitable rights, i.e. they cannot be taken back by employer.
Viral coefficient- The formula to get Viral coefficient is to multiply average number of invitations sent by each user by the conversion rate of the invitation to new user.
Voting Right- It is a right of stakeholder to vote on matters of corporate policies, decision on issuing securities, corporate actions and who will be among the board of directors.
W
Warrant- It is a stock option that gives right to purchase a company’s stock at specific price and at a specific date.
Weekly Active Users (WAU)- It is a way to measure amount of users of service or product in seven day or in a week.
Wireframe– It is a process of knowing how to create an app or website and it represents skeletal framework.
Y
Yak Shaving- Any pointless activity which is actually necessary to solve the problem, in order to achieve the original goal.
Z
Zombie Startup- Companies that show little or no growth in web traffic in past year but continue to operate. The company generate typically enough revenue to continue business, but investors or Venture Capitalists are not able to divest.
Zone of Insolvency- It is a situation where a company is on the verge of insolvency, company has insufficient money or assets to pay off its debt or liabilities. There are so many! Startup landscape is changing all the time with new funding opportunities and new business models, new terms or jargons will keep on emerging. In an effort to brush up old founders and help new startups, we came up with some commonly used terms.
