Startup terminology: Common startup terms you need to know
The startup world is a dynamic and fast-paced one, filled with its own unique language of phrases, buzzwords and acronyms. For aspiring entrepreneurs, understanding these terms is crucial for navigating the startup ecosystem and communicating effectively with investors, partners and team members.
Whether you’re launching your first venture or looking to brush up on your knowledge, this glossary of 50 essential startup terms will help you stay ahead of the curve.
- Accelerator
An organisation that offers different programmes with mentors, resources and also even funding opportunities to startups.
- Angel investor
An individual who provides capital to startups in exchange for equity (e.g. often at the early stages of the business). This is someone who believes in a startup’s idea or product.
- Bootstrapping
Funding a startup using personal savings or revenue generated by the business, without external investors such as angel investors.
- Burn rate
The rate at which a startup spends its capital before generating positive cash flow. This is an important financial aspect for investors.
- Cap table
A document, such as a spreadsheet, that outlines the ownership stakes in a company, including shares, options and convertible securities.
- Churn rate
The percentage of customers who stop using a product or service over a given period of time.
- Conversion rate
The percentage of users who take a desired action, such as signing up for a service or making a purchase.
- Crowdfunding
One of the funding options when a startup sources capital from a wide range of investors, usually via an online platform.
- Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, including marketing, sales and any other related expenses.
- Early adopter
An individual or a business who discovers and uses a product before the general public starts using it.
- Equity
Ownership in a company (i.e. typically represented by shares of stock).
- Exit strategy
A plan for how the founders and investors will exit the business – e.g. through an acquisition, merger or IPO.
- Freemium
A business model where a startup offers a basic version of its product for free, while there is the option to upgrade to a premium version for a fee.
- Ground floor
Earliest possible startup phase.
- Incubator
A program or organisation that supports early-stage startups with resources, mentorship and occasionally funding.
- Initial Public Offering (IPO)
The first sale of a company’s shares to the public, often used as a way for startups to raise significant capital.
- Key Performance Indicators (KPI)
The metrics a company uses to measure progress or success. However, they differ from startup to startup based on their business goals.
- Launch
An event when a startup brings its product or service to the market.
- Lean startup
A methodology that emphasises rapid iteration, customer feedback as well as a focus on building a minimum viable product (MVP).
- Minimum Viable Product (MVP)
The most basic and rather inexpensive product with the minimum features needed to test a concept with early adopters.
A business practice in which a startup contracts out certain tasks to a service provider located in a close geographic location.
- Pitch deck
A short, informative presentation used by startups to communicate their business plan and value proposition to potential investors.
- Pivot
A significant change in a startup’s business model or product strategy, often based on market feedback.
- Product-market fit
The point at which a startup’s product satisfies a strong market demand and gains traction with customers.
- Product roadmap
A strategic plan to create a product, describing the individual steps to be taken to meet a set of goals.
The process of creating an early sample or model of a product to test as well as validate concepts.
- Retention rate
The percentage of customers who continue to use a product or service over a given period of time.
- Return on Investment (ROI)
A financial metric to determine company performance versus amount of money invested.
- Revenue
The total amount of money generated by different startup’s operations.
- Runway
The estimated amount of time a startup can continue operating before running out of money.
- SaaS (Software as a Service)
A software delivery model where applications are hosted in the cloud and accessed via the internet.
- Scalability
The ability of a startup to grow its business model and operations efficiently as demand increases.
- Seed funding
The initial round of funding used to help a startup launch and build its product.
- Series A, B, C
Subsequent rounds of funding that startups raise in order to scale their operations after the seed stage.
- Stakeholder
A person or group of people who have an interest or concern with a business.
- Subscription model
A payment model which requires a monthly or yearly charge in order to fully use a product.
- Sweat equity
The non-monetary investment that founders and early employees make in a startup, often in order to exchange it for ownership.
- SWOT
An analysis of a team’s strengths, weaknesses, opportunities as well as threats.
- Target market
The specific group of customers a startup aims to serve with its product or service.
- Term sheet
This is a non-binding agreement that outlines both the terms and conditions of an investment.
- Total Addressable Market (TAM)
The total revenue opportunity available if a product or service achieves 100% market share.
- Traction
Evidence that a product or service is gaining momentum in the market, often measured by user growth, revenue or other key metrics.
- Unicorn
A startup valued at over $1 billion.
- Unique Value Proposition (UVP)
A statement that describes the benefits of a product as well as how that product solves customer needs.
- User acquisition
The process of attracting and acquiring new users or customers.
- Valuation
The estimated worth of a startup, often determined during funding rounds.
- Value proposition
A statement that explains the unique benefits and value a product or service offers to its customers.
- Vanity metrics
Metrics that bolster a company’s self-confidence but have no impact on the KPIs.
- Venture Capital (VC)
A form of private equity financing provided by either firms or funds to startups with high growth potential.
- White labeling
The practice of rebranding a product or service produced by one company for use by another company as its own.
Startup terminology made easy
Navigating the startup world requires not just vision and determination, but also a solid understanding of the language that shapes the industry. These 50 terms represent some of the most important concepts every entrepreneur should know, providing a foundation for successful communication, strategy, and growth.
By familiarising yourself with this glossary, you’ll be better equipped to tackle the challenges of the startup ecosystem and thus turn your ideas into a thriving business.
You already know all the terms and are ready to build your MVP? Or you want to scale your existing product? Get in touch with our team today.
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