List of Frequently Used Terms in Startup Departments
- Angel Investor: An individual who provides financial backing for startups, often in exchange for ownership equity. Angel investors typically have industry experience and can offer valuable guidance to early-stage companies.
- Burn Rate: The rate at which a company is spending its capital over a specific period. It is crucial for startups to monitor their burn rate to ensure they have enough runway before they achieve profitability.
- Churn Rate: The percentage of customers who stop using a product or service within a given time period. High churn rates can indicate issues with product-market fit or customer satisfaction.
- Disruptive Innovation: An innovation that creates a new market and value network, eventually disrupting existing markets and displacing established market-leading firms, products, and alliances.
- Equity: Ownership interest in a company represented by shares of stock. Startup founders typically allocate equity to employees, investors, and advisors as a form of compensation or capital investment.
- Freemium Model: A business model that offers a basic version of a product or service for free, with the option to upgrade to a paid premium version for additional features or functionalities.
- Growth Hacking: A marketing technique focused on rapid experimentation across various channels and product development to identify the most effective ways to grow a startup.
- IPO (Initial Public Offering): The first sale of a company's stock to the public. Startups may pursue an IPO as a way to raise significant capital and provide liquidity to early investors.
- KPIs (Key Performance Indicators): Quantifiable measures that help startups track and evaluate their progress towards specific business objectives. Common KPIs include revenue growth, customer acquisition cost, and user retention.
- LTV (Lifetime Value): The predicted net profit attributed to the entire future relationship with a customer. Understanding LTV helps startups make strategic decisions related to customer acquisition and retention.
- Market Fit: The degree to which a product satisfies strong market demand. Startups must iterate and refine their products continually to achieve product-market fit and drive sustainable growth.
- Pivot: When a startup shifts its business strategy, product direction, or target market in response to feedback, market changes, or internal insights. Pivots are common in the early stages of startup development.
- Runway: The amount of time until a startup exhausts its current funding, typically measured as the number of months before the company reaches cash flow breakeven or secures additional financing.
- Seed Round: The initial funding round for a startup, usually provided by angel investors, venture capitalists, or accelerators. Seed rounds help startups validate their concepts, build prototypes, and establish early traction.
- Unicorn: A startup company with a valuation exceeding $1 billion. Unicorns are rare and attract significant attention in the startup ecosystem due to their rapid growth and disruptive potential.