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!
Angel investor
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.
Assets
Assets are things that hold value to a company or an idvidual can benefit from in the future. Your assets can be stock, bitcoin, your car, your education, even your dog. (Assets= Equity + Liability.)
B2B, B2C, B2G, B2B2C
These are business models that define who are you selling your product or service to.
B = Business
C = Consumer
G = Government
2 = to (You already knew that)
- B2B = the big guy sells to another big guy.
- B2C = big guy sells to the small guy.
- B2G = big guy sells to the big brother.
- B2B2C = the big guy sells to another big guy (the middle man), who then sells it to the small guy.
Bootstrapping
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
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.
Capital
Capital this, Capital that! What the s**t is it? Capital is basically Money or financial wealth that is necessary to start a business OR invest to make more money.
Churn
Not everyone loves or commits to a product or service. Churn is the number of paying customers who cancel their subscription. A low churn rate is usually a good sign.
Crowdfunding
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.
Early adopters
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.
Equity
To break it down: As an individual equity could be applied to your car, house or your business. Let’s say your house is worth 10,000 €, and you are selling it. You still have 4000€ of unpaid mortgage, so if you sell the house and get 10,000€ your equity is 6000€. (Equity= Assets – Liability)
FFF – Friends, Family, Fools
People around you who may want to invest or purchase an ownership in your business venture! They can be your beloved friends and family who want to support you, or just fools, who are eager to invest in risky businesses.
Growth Hacking
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!
Liabilities
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 – Nondisclosure Agreement
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.
Pivot, Pivoting
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.
Problem solution fit
Problem solution fit is the foundation for product market fit. Remember Value proposition? We wonder if the customer would buy or subscribe to the product or service. So time to do some exploring by series of testing and validation if your solution is actually solving the customer’s problems. If it doesn’t, then back to the drawing board you go!! Ask any of our community startups at Platform6, no company or product has stayed the same since creation.
Product market fit
Product market fit is the specialisation process after problem solution fit. This part is all about developing your awesome product / service, talking to your target group and finding out who exactly are your customers. In addition this is something startup accelerators work with often, and guide the startups to find the right product market fit.
Shareholder Agreement
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.
Social Capital
Best way to define this would to take Tribe as an example. Our main capital lies in our networks, talents and you guys who make Tribe. Our shared goals, values and efforts in the startup community that lead to growth and can be considered as social capital.
Startup Ecosystem
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.
UX – User Experience
When using a certain product, system or service, ask yourself how easy and efficient it is to use it, and how well does it solve your problem and respond to your needs. If you have an answer, you have an user experience!
UI – User Interface
User interface is a space for friendship of humans and machines, where interaction between these two occur. Your computer’s operating system is a perfect example of UI.
Unfair competitive advantage
If you have something so unique that is almost impossible for anyone to copy, and also something that your customers really need and value, you have an unfair competitive advantage over your competitiors. You are just simply the best. Better than all the rest.
USP, unique selling proposition
Does your product or service have a feature that makes it better from all the competitors? For example a material that makes it last longer than other similar products? If your customers are willing to buy your product instead of competitors (and pay even a bit more), you have a USP!
UVP, unique value proposition
How to make your product or service stand out from all other alternatives, and become the best possible option for the customers! By coming up with a unique value proposition that no one else has! UVP points out the unique personality, identity and strenghs of your business.
Value Capture
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
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
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.