Words can be scary! We are here to explain the most common words used by the startup community for everyone to understand what the heck are they talking about!?! We will add new words here every week so stay tuned!
True to the title, an angel investor is a godsend for startups and entrepreneurs alike. An angel investor typically is a wealthy person who offers you money in exchange for a slice of an ownership in your company. Meet some real life angels here.
Bootstrappers strap your boots. Just kidding. They are startups who don’t depend on investors. They rely on combining their own savings along with talented awesome people and pure luck to fund the starting stages of their startup. Check out this awesome example of Bootstrapping!
Burn rate is the rate at which a company is losing money, in other words, how much money you can spend before the cash flow is negative. A company’s burn rate is usually the total amount of money they spend in a month. So if you manage to spend one million a month, it means your burn rate is one million. It also means you are a big spender.
If you have a product or a service that you are super excited to develop, but for some reason the big investors don’t see the value, you might want to try crowdfunding. If you plan your crowdfunding campaign to be as cool and sexy as possible, you might get the attention of a large number of early adopters willing to put a small amount of their money to help you launch your stuff.
We all know a person who got a new gadget that no one else has yet, and can’t keep their mouth shut about how cool it is and how everyone should have one. Those are early adopters. The people who use a new product, innovation, or technology before others. Startups benefit from early adopters because they are ambassadors of the new product, and can also give valuable feedback on the possible flaws.
Growth hacking is a mentality of failing fast to succeed, experimenting, creativity and trying s**t out. If you want to know why to hack growth, here’s a brand new article about the subject by Red Brick Accelerator!
As an individual your liabilities would be your student loans, weekly groceries, monthly bills and payments you need to make in order to thrive. In businesses liabilities are debts you own to employees, other businesses, bank loans, taxes and operational expenses. (Liabilities = Assets – Equity)
NDA protects sensitive information that is not meant for anyone else’s ears except people involved. If you sign an NDA when you start in a new job, you can’t tell anyone about the secrects at your workplace. Secret things protected with NDA can be their business model, recipe of a product, new innovations or other similar things.
When you read ‘Pivot’, does your mind go to Ross screaming ‘PIVOT’? Us too! To Pivot is to change the product or service to respond to the problem better. Think of it as finding a better place for your couch where it aligns better with the television. According to Red Brick Accelerator, on an average 30-40% of startups pivot during their incubation period.
As you might expect, a shareholder agreement is an agreement between parties who have invested to the company and own a share of it. Usually it is made to protect the investment and set out fair rules between investor dudes and govern of the company so that nobody gets bamboozled.
Like in nature’s ecosystem, the principle is the same. People, startups, communities and other operators interact together, supporting and helping each other to grow. Tampere’s startup ecosytem is born from people, passionate startups, organisation and a bustling city that has birthed 285 active startups.
Value capture is a model in which a business is able to create profit from its transactions. Think of it as growing an apple tree yielding delicious apples, you have your value there but you need to sell those apples to capture value. One easy way to test your ability to capture value is to see if you can raise prices without losing customers?
Value proposition is to indicate why a customer would buy or subscribe to your product/service. The product or service you create should aim to solve your consumer’s troubles or offer new solutions that the competition doesn’t. If you cannot do those things, maybe time to evaluate your product/service and PIVOT??????!
Venture capital is a BIG load of money that boosts your company in exhange for equity. Sort of like when Ariel gives up her voice for legs. JUST KIDDING. This will only happen when the investor can see long term growth potential. If your company has caught the attention of a venture capitalist, you might be doing well.