The world of venture capital (VC) and startups is filled with various jargon and terms that are commonly used in conversations, pitch meetings, and industry discussions. Understanding these terms can be crucial for anyone involved in the startup ecosystem, whether as an entrepreneur, investor, or industry professional.
Here are some of the most common VC and startup jargon:
- VC (Venture Capital): Funding provided by investment firms to startups and small businesses that are deemed to have long-term growth potential.
- Startup: A newly established business, typically in the early stages of development and with a focus on innovation.
- Seed Funding: Initial capital provided to a startup to prove a concept, develop a minimum viable product (MVP), and conduct early-stage research.
- Series A, B, C, etc.: Different rounds of funding that a startup goes through as it grows. Series A is typically the first significant round after seed funding.
- Angel Investor: High-net-worth individual who provides financial backing for small startups or entrepreneurs, often in exchange for equity.
- Pitch Deck: A presentation that provides an overview of a startup’s business, including its problem statement, solution, market, team, and financial projections, used to attract investors.
- Runway: The amount of time a startup can operate before it runs out of money, usually expressed in months.
- Unicorn: A privately held startup valued at over $1 billion.
- Exit Strategy: A plan outlining how investors will realize their investment, such as through an IPO (Initial Public Offering) or acquisition.
- Burn Rate: The rate at which a startup is spending its capital to cover operating expenses before generating positive cash flow.
- MVP (Minimum Viable Product): The initial version of a product that includes only the essential features needed to satisfy early users and gather feedback for future development.
- Pivot: A significant change in a startup’s business model or product strategy.
- Term Sheet: A non-binding agreement that outlines the basic terms and conditions under which an investment will be made.
- Due Diligence: The process of investigating and evaluating a potential investment or acquisition to ensure the accuracy of the information provided by the startup.
- Cap Table (Capitalization Table): A table that shows the ownership structure of a company, including the equity ownership of founders, investors, and other stakeholders.
- Convertible Note: A type of short-term debt that converts into equity in a future financing round.
- Bootstrapping: Building a company with little or no external capital, relying on personal savings and revenue to fund operations.
- Pitch Deck: A presentation that provides an overview of a startup’s business, including its problem statement, solution, market, team, and financial projections, used to attract investors.
- Stealth Mode: Operating in “stealth mode” means keeping a startup’s activities and plans confidential until it is ready to launch or make a major announcement.
- Elevator Pitch: A concise and compelling description of a startup or business that can be delivered in the time it takes to ride an elevator.
