A Beginner's Guide to Entrepreneurship Terminology

Term

Definition

Example Usage

Acquisition

The process of one company purchasing most or all of another company's shares to gain control.

"The tech giant's acquisition of the startup allowed them to integrate new AI technology into their product offerings."

Angel Investor

An individual who provides capital to early-stage startups in exchange for equity or convertible debt.

"The startup received $50,000 from an angel investor who believed in their vision and wanted to help them get off the ground."

B2B (Business-to-Business)

A business model where transactions occur between two companies, rather than between a company and individual consumers (B2C).

"Their B2B platform connects manufacturers with retailers, streamlining the supply chain process."

B2C (Business-to-Consumer)

A business model where transactions occur between a company and individual consumers.

"The online retailer operates on a B2C model, selling directly to customers through their website."

Bootstrapping

Starting and growing a business using personal savings or the company's own revenue, without external funding.

"Lisa bootstrapped her online clothing store, reinvesting profits from her initial sales to grow the business instead of seeking outside investment."

Brand Equity

The value and strength of a brand in the marketplace, often reflected in consumer perception, recognition, and loyalty.

"Apple's strong brand equity allows it to command premium prices for its products."

Burn Rate

The rate at which a company spends its cash reserves or funding, usually measured monthly.

"With a burn rate of $10,000 per month, the startup has enough runway to last six more months before needing to raise additional capital."

Business Model

A plan outlining how a company creates, delivers, and captures value, including its revenue streams and target market.

"Their business model is based on a subscription service where customers pay a monthly fee to receive curated boxes of healthy snacks."

Business Plan

A written document that outlines a company's goals, strategies, target market, and financial projections.

"Before seeking investors, they created a comprehensive business plan to outline their vision and strategy for growth."

Crowdfunding

The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via online platforms.

"The startup used crowdfunding to raise initial capital, allowing them to bring their innovative product to market."

Customer Acquisition Cost (CAC)

The total cost of acquiring a new customer, including marketing, sales, and other related expenses.

"Their CAC is $50 per customer, which means they need to generate more than $50 in revenue from each customer to be profitable."

Customer Lifetime Value (CLTV)

The predicted revenue a customer will generate over the course of their relationship with a business.

"Their marketing efforts focus on increasing CLTV by offering subscription services that keep customers engaged over the long term."

Disruption

An innovation that significantly alters or disrupts an existing market or industry.

"Uber is a classic example of disruption, as it revolutionized the traditional taxi industry with its ride-sharing platform."

Ecosystem

A network of interconnected businesses, suppliers, and customers that support and depend on each other to create value and drive innovation.

"The startup is part of a larger tech ecosystem that includes software developers, hardware manufacturers, and cloud service providers."

Elevator Pitch

A concise, persuasive speech used to spark interest in what your organization does, typically delivered in 30-60 seconds.

"She perfected her elevator pitch to quickly capture the attention of potential investors during networking events."

Equity

Ownership in a company, often represented by shares. Investors may receive equity in exchange for funding.

"The founders offered 20% equity in exchange for $1 million in investment, giving the investors a stake in the company's future profits."

Exit Strategy

A plan for how founders and investors will eventually cash out of the business, typically through an acquisition, merger, or IPO.

"Their exit strategy involves selling the company to a larger competitor once they reach a certain revenue milestone."

Freemium

A business model where a company offers a basic version of its product for free, with the option to upgrade to a paid version with more features.

"Spotify's freemium model allows users to stream music for free, but offers a premium subscription with additional features like offline listening."

Go-to-Market Strategy (GTM)

A plan that outlines how a company will sell its product or service to customers, including marketing, sales, and distribution strategies.

"Their GTM strategy focuses on using digital marketing channels to reach tech-savvy consumers."

Hockey Stick Growth

A pattern of rapid growth followed by a period of stability, often seen in successful startups after they achieve product-market fit.

"The startup experienced hockey stick growth after their mobile app gained popularity among users."

Incubator

A program or organization that supports early-stage startups by providing resources such as office space, mentoring, and access to investors.

"The startup joined an incubator that provided them with office space, mentorship, and connections to potential investors."

Intellectual Property (IP)

Creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images, that are legally protected.

"The startup secured patents for their new technology to protect their intellectual property from competitors."

Lean Startup

A methodology that emphasizes creating a minimal viable product (MVP), testing it in the market, and iterating based on customer feedback.

"By following the lean startup approach, they were able to quickly validate their product idea without spending too much time and money upfront."

Lifetime Value (LTV)

The total revenue a business expects to earn from a customer over the entire duration of their relationship.

"With an LTV of $300 and a CAC of $50, the company is seeing a healthy return on its customer acquisition efforts."

Market Penetration

A strategy to increase market share by selling more of a company's existing products to its current customers or entering new markets.

"The company focused on market penetration by offering discounts to attract more customers and increase sales."

Minimum Viable Product (MVP)

The most basic version of a product that can be released to early customers to validate the business idea and gather feedback.

"They launched an MVP of their fitness app with just the core features to see if there was demand before investing in additional development."

Monetization

The process of converting a product, service, or platform into a source of revenue.

"The startup is exploring different monetization strategies, including advertising and premium subscriptions."

Networking

The process of building and nurturing professional relationships to create opportunities, gain insights, and support business growth.

"Attending industry conferences has been crucial for networking with potential clients and partners."

Pitch Deck

A brief presentation, often created using PowerPoint, used to provide potential investors with an overview of your business, its goals, and needs.

"They used a pitch deck to showcase their business model and growth potential to investors at the startup competition."

Pivot

A significant change in a company's strategy, typically involving a shift in the product, target market, or business model.

"After realizing that their initial product wasn't resonating with customers, the team decided to pivot to a B2B model, targeting businesses instead."

Product-Market Fit

The degree to which a product satisfies a strong market demand, often indicating that the product is ready for scaling and wider adoption.

"They achieved product-market fit after extensive testing and feedback, leading to rapid growth in user adoption."

Revenue Streams

The various sources from which a business generates income, such as product sales, subscriptions, or licensing fees.

"The company's revenue streams include both direct sales of their software and recurring subscription fees for cloud services."

Runway

The amount of time a business can continue operating before it runs out of cash, based on its current burn rate.

"Given their current runway, the company needs to either raise more funds or become profitable within the next eight months."

Scalability

The ability of a business to grow and expand efficiently without being constrained by its structure or resources.

"The software-as-a-service (SaaS) model is highly scalable, as the company can add new users with minimal additional costs."

Scalable Business Model

A business model that allows for increased production or service delivery without corresponding increases in costs, enabling the business to grow profitably.

"They focused on building a scalable business model by automating key processes, allowing them to handle more customers without increasing overhead."

Seed Funding

The initial capital raised by a startup to begin operations, develop a product, or conduct market research, typically from angel investors.

"They raised $100,000 in seed funding from an angel investor to develop a prototype of their product."

Series A, B, C Funding

Successive rounds of investment raised by a startup to grow the business, each typically led by venture capital firms.

"After a successful seed round, they secured $5 million in Series A funding to scale their marketing efforts and expand internationally."

Social Proof

The influence that the actions or testimonials of others have on an individual's decisions, often used in marketing to build trust and credibility.

"They leveraged social proof by featuring customer reviews and testimonials on their website to boost conversions."

Strategic Partnership

A formal agreement between two companies to work together toward common goals while remaining independent organizations.

"Their strategic partnership with a leading e-commerce platform allowed them to expand their reach to a broader audience."

Sweat Equity

The non-monetary investment that founders or employees contribute to a startup in the form of time, effort, and expertise, often in exchange for equity.

"The startup offered sweat equity to its early employees, giving them a stake in the company's future success."

Target Market

A specific group of potential customers that a business aims to reach with its products or services.

"Their target market includes young professionals who are looking for convenient and healthy meal options."

Term Sheet

A non-binding agreement outlining the basic terms and conditions under which an investment will be made.

"The startup received a term sheet from a venture capital firm, detailing the proposed investment amount and equity stake."

Value Chain

The full range of activities that businesses go through to bring a product or service from conception to delivery to the end consumer.

"By optimizing their value chain, the company was able to reduce costs and increase efficiency across all stages of production and distribution."

Value Proposition

A statement that explains the unique benefits a product or service provides to customers, and how it solves their problems or meets their needs better than alternatives.

"Our value proposition is that we offer eco-friendly cleaning products that are not only effective but also safe for children and pets."

Venture Capitalist (VC)

An investor or investment firm that provides funding to startups with high growth potential, usually in exchange for equity.

"After bootstrapping for a year, the startup secured $2 million from a venture capitalist to accelerate their growth."

Vision Statement

A brief description of a company's long-term goals and aspirations, serving as a guide for decision-making and strategic planning.

"Their vision statement is to become the leading provider of sustainable energy solutions worldwide."