Important Startup Terminologies that should be a part of vocabulary
As an entrepreneur are you planning on boot-strapping or is it the help of a venture capitalist that you are interested in? In either case you would need a great pitch. When attracting investors, you should impress upon them that they are going to get good ROI soon enough.
Confused at what was written above? If you are a young entrepreneur with huge dreams but little experience, the jargons used above should startle you. But worry not. They are just jargons and you can easily learn them. They won’t be a roadblock to your dreams — but nevertheless knowing them will help. Let us take a look at some of the startup terminologies that should be part of your vocabulary.
Mentorship and financial support are two things that help every entrepreneur understand the business environment. This is what accelerators do — they are formal learning centers for startups to acquire knowledge from industry experts, aka, mentors. Startup accelerators are also known as seed accelerators, and are formalized centers for learning.
It has become a common trick to generate revenue through advertisements in the garb of “real content” and this is called advertorials. When you pay for publishing content but what it to appear as an ad, it is referred to as advertorials. These type of advertisement gimmicks are becoming popular because the effectiveness of ‘traditional ads’ are decreasing, especially in online media. Advertorials are proving to be great means of capturing ad revenue.
The term boot-strapping evolved from the phrase “pulling oneself up by one’s bootstraps” and literally means to start a business using funds from one’s own resources. This could mean starting the business by using your own savings or taking help just from close family and friends. Once the startup starts running with the initial investment, and slowly starts making profit, the revenue is used as further investment.
#4 B2B & B2C
These are two very common terms used in the business world. B2B translates to Business-to-Business and suggests that a business sells products or service to other businesses. For example, if you are into the business of selling machinery to a garment manufacturing store, you run a B2B. On the other hand, in B2C or Business-to-Consumer, products or services are sold to consumers. For example, the clothes made by the garment manufacturer are sold to consumers.
Also known as Pitch Deck, it is a standard slideshow presentation, normally with just 10 slides. A deck has to be concise and informative so that when an investor sees it, he is convinced that there is merit in your idea and funding you would be rewarding.
ESOP or Employee Stock Ownership Plan is an investment plan that encourages employees to acquire stock of the company and earn direct profit. Most often employees do not have to bear any upfront cost to acquire the stocks. They are more or less seen as remuneration given to employees for their work done. It is common practice to keep the allocated funds in an ESOP fund that employees can sell once their leave or retire from the company.
Minimum Viable Product (MVP) is a product in its early phase of development which is launched with bare minimum features for the public. As more customers start using the product, they also offer feedback on its drawbacks — which is then incorporated by the startup. MVP has become a tried and tested method of launching products as it helps startups invest less on product development while at the same time get direct feedback from customers. MVPs reduce the stress startups have to put on R&D.
#8 Ramen Profitable
When a startup aims to earn just that much profit so that basic living expenses are met, it is called ramen profitable. When startups aim for just ramen profitable, they are looking at just initial profits, without thinking of earning huge profits right at the beginning. It is like giving yourself more time to improve your startup.
ROI or Return on Investment is what the investor expects as revenue returns from a startup. It is usually expressed as percentage and the standard formula used is ROI = (Net Profit / Cost of Investment) x 100. ROI is generally the investor’s methods of finding out how his/her investments are bearing fruit and whether the money has been efficiently used.
#10 Venture Capitalist
An investor who helps a startup or a small company financially by venture capital funding in the initial phase is called a venture capitalist. Venture capitalists usually help people with big ideas but little or no financial support. They believe in the credibility of the idea and hope that they will earn huge returns on investment once the startup succeeds.
Need help for your startup? Contact our startup consulting team