Fundamentals

Startup – a young company with a fresh business idea, characterized by innovation, ambition, and a need for investment. A startup is more of a stage in the development of a new company aimed at conquering a newly emerged market or its segment.

Unicorn – a startup that has received a market valuation of over $1 billion, a company with explosive growth. According to average statistics, only 10 out of 100 startups will successfully survive for more than 4-5 years, and of these 10, only 1 will become a unicorn, meaning it will generate significant profits.

Venture – a project, business, or capital associated with risk. More risk means greater potential for gain and higher profits.

Founder and Co-founder – the founder and co-founder of a startup.

Google/Samsung Killer – an extremely ambitious startup that positions its product as super-unique and even genius. This term is often used mockingly, but sometimes such startups grow into real "brand killers."

A hackathon - is an event where specialists from different areas of software development (programmers, designers, managers, marketers) work together to solve a problem or create a new software product. In addition, during the hackathon, master classes and consultations with experts and mentors are held. The goal is to create a working prototype of a software product from scratch in a limited time.

Facilitator - A person who monitors the rules of the event (someone who manages, leads, moderates the event) and maintains positive group dynamics is called a facilitator (from the Latin facilis - "easy, convenient"). In the West, you can even get a special certificate and then make money on this, participating in large business negotiations (for real losers).

Terms related to obtaining investments

Fundraising – the process of attracting financial and other resources that the company cannot provide on its own and that are necessary for the implementation of a specific project or business activity as a whole.

Pre-money valuation – the valuation of a company that does not include potential investment. It best describes how much a startup might be worth before it starts receiving any investments.

Post-money valuation – the valuation of a company after it receives investments. It includes pre-money valuation plus investments.

Round – a stage of raising funds for business development. Rounds are closely tied to the stages of a project. Each stage has its distinguishing features, level of risk, and most importantly – different perspectives on its future, so different rounds attract investors of varying levels. Rounds are divided into early (pre-seed, seed, A) and late (B, C, D).

Capitalization table (Cap table) – a table that shows in chronological order the percentage of ownership held by each stakeholder in the company (founders, investors, etc.). It also allows forecasting how many shares each co-owner will have during each investment round.

SAFE (Simple Agreement for Future Equity) – an agreement between the investor and the company that gives the investor rights to shares in the company in the future, when a certain event (liquidity event) occurs. Under SAFE, the investor will receive shares in the future, but invests now.

Traction – a set of metrics and achievements over time, used to prove to a potential investor that your startup is attractive for investment. The most common indicators are growth in the number of customers, users, and sales.

Term Sheet – a document with the main terms of the deal, where key agreements about the price, timelines, confidentiality, and other terms of cooperation between the investor and the startup are outlined.

Due Diligence – the procedure for deep analysis of the past, present, and projected future aspects of your project by an investor, aimed at identifying risks. It includes checks of legal, financial, and technological documents. How due diligence is carried out is described in a separate article.

Tranche – a portion of a loan, credit, or another payment amount transferred in a single installment.

Ramen-Profitability – the minimum profitability of a startup when the company is already operating profitably but does not yet bring large dividends to the founders.

Exit – the exit of an investor from the project through the sale of their share.

Project stakeholders - are those who are actively involved in the project, whose interests it can affect: investors, creditors, managers, consumers.

Workshop - is a non-profit intermediate event for project teams, with the participation of potential investors, aimed at preparing presentation materials on startups before the Presentation Session.

A spin-off - is a new company created by a large company by transferring part of its assets (with the subsequent distribution of all new shares among the shareholders of the parent company).

Bootstrapping - If you don't want to share a share or simply no one gave you money, then you are going by bootstrapping (literally - tightening the straps on shoes, tightening the belts). If you take money from the bank for your project - this will also be bootstrapping.

Terms related to startup presentations

Pitch – a brief structured presentation of a project to potential investors. A pitch can be individual, where you visit the investor's office, or it can take place during pitch sessions and demo days, where an investor arranges a "viewing" of several startups.

"Elevator pitch" – a method involving a quick verbal presentation of the project within a couple of minutes. The "elevator pitch" can be spontaneous when you unexpectedly meet or get introduced to the right person, or it can be planned when you specifically seek out a particular individual. In any case, it's better to prepare for an "elevator pitch" in advance.

Invest Deck – a slide presentation that a startup sends to an investor for initial review. It includes the essence of the idea, the problem the startup solves, market evaluation, strategy description, team, financial model, and investment request.

Pitch Deck – a slide presentation that accompanies the pitch. It is usually less detailed than the Invest Deck, as it is meant to illustrate the speaker's story.

Meetup - is a meeting of specialists to exchange experiences and discuss work issues. A meeting of startup initiators, consultants and experts in an informal setting, held with the purpose of exchanging information, experience and planning development prospects within the framework of the professional interests of its participants on a pre-defined topic.

Terms related to the operation of a startup

Roadmap – The path or plan that your startup will take from the starting point to launching your product in the market. The "roadmap" highlights the most important steps, including metrics such as revenue, customer count, and product stages.

Dashboard – "Control panel," a place where key metrics are displayed to indicate the real progress and health of the business. Startups typically create their first dashboards in Google Sheets, but as the business grows, many develop their own software.

Pivot – A change in the business model or strategy. Observations show that startups tend to change their strategy more frequently than other companies.

B2B (Business to Business) – A business model where the company works not with individuals but with other companies.

B2C (Business to Customer) – A business model that involves working with private individuals. Sometimes a single company combines both B2B and B2C products, providing services to both individuals and organizations.

HADI cycles – A method for hypothesis testing, consisting of four blocks: Hypothesis (Hipothes), Action (Action), Data (Data), and Insights (Insights). We have detailed how HADI cycles work and how hypotheses are tested in startups here.

Growth Driver – A measurable metric that improves results and has a multiplicative effect on growth. For example, increasing the average purchase size is a growth driver for B2C companies.

Benchmark - is a comparison of your company's performance with industry or competitors.

Customer Activation - is the second step in the online sales funnel of “attracting, retaining and growing” consumers. After acquiring users, you encourage them to register on the site or make purchases.

Customer discovery - is the first of four stages of the customer development process. At this stage, founders formulate their hypotheses regarding the business model, after which they conduct experiments to test the problem and solution on real consumers.

Deadpool - is a tech business term for getting into/going out of business, and a deadpool is when a company ceases to exist due to lack of funding.

Terms related to the product

Killer feature – A unique quality of a product that provides a powerful competitive advantage.

Trial (Free Trial) – A free trial period for using a SaaS service. It usually lasts no longer than 14 days, during which time the user can test the product and decide whether to subscribe to the paid version.

MVP (Minimum Viable Product) – A working prototype of a product, which can be used to test demand in the real market. It is necessary for hypothesis testing before full-scale production.

Lead magnet – A free piece of the product's value offered to potential customers in exchange for an action, such as subscribing to a mailing list. This can be useful information in a newsletter, a test drive, or a trial. Using lead magnets is an effective step in the sales funnel.

Blamestorming - is a search for a person or a reason that caused a problem.

A/B testing - compares one version of a web page with another and helps to identify the one that gives the best results.

An iteration - is a small change to one or more elements in a business model template. (For example, increasing the price from $39.99 to $79.99 or switching the segment from 12-15 year old boys to 15-19 year old boys.)

The Waterfall model - is a process for developing a product (hardware, software, or service) using a linear, sequential, step-by-step method. The product and all of its features are specified in advance. Each stage of the waterfall process is assigned to a separate team to ensure control over the project and adherence to deadlines. The Waterfall model is the opposite of Agile development.

Freemium - is a business model that consists of offering to use a product or service for free, while extended (improved, premium) product functions, its additional functionality or services, other products related to the main one - all this is offered for an additional fee, based on the popularity of the main free product.
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