Startup terms to know

Startup terms to know

       New entrepreneurs, or startup businesses, often use the latest technology to run their business; therefore, because of the innovations and changes in this era of communication through technology, there are some specific terms in this business circle that are used when they discuss their business ideas with other people in the same industry when they are looking to attract funding from investors.

       Therefore, to step into the startup world, it is important to learn and understand the business through business terms for better negotiation or information exchange. 

1. “Unicorn” and “decacorn” are common terms found in the news. “Unicorn” refers to startups with a valuation over 1 billion USD, while “decacorn,” derived from the prefix deca-, which means 10, refers to startups with a valuation over 10 billion USD;

2. Problem Solution Fit is often used at the beginning of business. This term refers to finding and developing ideas, mainly looking for the “pain point,” a problem in society or a target group for which the new business has a solution that will fit;

3. Prototype or model of an idea. There may be many ideas, but some ideas will be used in testing and collection of data for the actual product development;

4. Product Market Fit (PMF) is the balance between market and product or creating a product that is well-accepted, popular, and desired by customers;

5. Demo Day is an event for the presentation of a business plan to investors. Demo Day is organized by organizations or companies that provide startups with support or improvement for fast growth;

6. Pitching is the presentation of a business plan or idea to investors or committees in order to form a venture or enter a competition for prizes. Therefore, pitching requires a concise and clear presentation;

7. Frothy Startup Valuations refer to overpriced stocks or overvalued stocks. These stocks are often described as “frothy,” which is now used instead of “bubbles.” Frothy refers to the startups that are perceived to have high per-share values based on expected growth rates, investors’ future earnings per share, the “fear of being left behind,” and the business’ tendency toward becoming a unicorn. In conclusion, being frothy is good for entrepreneurs;

8. MVP stands for Minimum Viable Product. It refers to a version of a product with just enough features to be usable by early customers, who can then provide feedback for future development of products and business models. There are many forms of creating a startup using this MVP method, whether developing a software with only the core features, such as designing and drawing or making a short video explaining the product, including the creation of the company’s website page for those who are interested to fill out the form, etc.;

9. Pivot refers to the development phase of a startup where existing technologies may be applied and adapted to create new products of their own. In other words, this startup is changing its business model or strategies;

10.  Super-Angel Investors, or Micro-VC, refers to professional investors who invest in startups with their own money, like Angels. The difference is that these people have more resources, understanding, and connections with the startup business;

11.  Deep-Dive Meeting or in-depth discussion. After a startup makes its pitch to investors, if investors are interested, the startup founder may be invited to a deep-dive meeting in order to discuss more details with difficult questions and to give feedback. This is a good sign for entrepreneurs, as it is an opportunity to show investors the startup founder’s skills, understanding of the business, and motivation. Therefore, the startup founder should be well prepared;

12.  Growth Hacking Marketing, a term that many people in the startup industry, especially marketers, may be familiar with, refers to a marketing strategy focusing on rapid growth over a short period of time at the lowest possible cost in order to get a large number of users, such as the use of social media and viral marketing. This is different from traditional marketing that often relies on traditional media such as radio, newspapers, and television. Growth hacking marketing is primarily based on creativity. Although it doesn’t use fancy or expensive methods, it can increase the user base and create a trend through word of mouth;

“Growth hackers” refers to those who do their marketing using such methods. These growth hackers are as smart as software hackers and well respected by investors;

13.  Bootstrapping refers to a startup team that starts building its own company without the help from investors or financial institutions, using only their own savings and income from selling products to grow the business;

14.  Burn Rate refers to the amount of expenses per month before a startup can successfully monetize its own product. The burn rate is calculated based on all costs, such as employee salaries, office space rentals, server rentals, etc. The burn rate can be divided into two types, which are Gross Burn Rate, the total expense in one month of the startup business, and Net Burn Rate, which is the expenses per month after income deduction;

15.  FMA (First Mover Advantage) refers to the competitive advantages gained by being the first to bring a new and unique product or service to the market. These startups have the opportunity to build a customer base and develop products ahead of competitors. Therefore, they are more likely to succeed and become the dominant players in the industry.