By Eoin O'Hara
It's sad to say but contractions, corruptions, metaphors and shameful linguistic crimes colour the flow of everyday business discourse.
The majority of us will also have found ourselves in the rather unsettling circumstance of being caught in the middle of heady business discussion, silently smiling and nodding furiously, whilst trying to decipher what on earth our peers are actually talking about.
Yes, unless you are a religious reader of Forbes or Business Insider, it can be easy to find oneself adrift in a sea of ‘unicorns’ ‘ninjas’ and ‘low-hanging fruit’!
To spare you the shame of any more business embarrassments, I have put together a little collection of 19 common business and startup terms that you will come across, with a little explanation of what each one means!
Angel Investor: A wealthy individual who provides investment to an enterprise in exchange for an equity stake in the business. The term is derived from the theatre world in the 70s when wealthy benefactors or ‘angels’ would provide sponsorship to support performances. An angel investor is likely to take a hands-on approach to business development offering advice, support, and connections to help make the venture into a success.
Venture Capitalist: An extremely wealthy individual who invests in a startup or SME that is usually not applicable for publicly available funding. They often request a significant proportion of the business equity in return. They differ in many ways from angel investors, not least in that they will usually take a much less hands-on approach to the businesses they invest in.
Capital: Just a fancy way of saying ‘money’, most often used in situations where ‘mullah’ ‘dollar’ or ‘green’ might be considered inappropriate.
Bootstrapping: Not unlike ‘belt-tightening’, bootstrapping has become the common word to describe the process of setting up and running a business using minimal funds, one’s own funds, or funds generated from an existing business. Businesses which begin and grow in this way are often referred to as...
Lean Startups: Because of the way they strive for maximum return for the minimum amount of effort of expenditure. ‘The Lean Startup’ is a methodology for the creation of a business, which was first described by Silicon Valley entrepreneur Eric Ries, through which fledgling ventures can reduce their market risk, and increase their chances of success through a process of continual repetition. This method has been instrumental in the creation of a number of…
Unicorns: Not just one-horned mythical creatures anymore, but startups which have a value of over $1 billion. Originally so-called because of their almost mythical rarity, numbers have increased significantly over the first few quarters with a new term ‘Decacorn’ emerging to describe those startups which now exceed $10 billion in value. The most famous members of this exclusive club include Snapchat, AirBnB, DropBox, Pinterest and Uber.
Seed Investment: Nothing to do with gardening but refers to money which is invested into a venture (usually an early-stage startup) to help it grow to the stage where it is capable of generating its own income and delivering a profit. It is also often referred to as seed capital or seed money and plays on the rather obvious imagery of a seed sprouting into a plant.
Equity: The definition of this term depends heavily upon the context in which it is used, but in the case of businesses it describes anything which denotes ownership, usually expressed as a percentage. For example, let's assume that you are the owner of a business with 1000 shares, you sell 250 of those shares to an investor... They are now the owner of a 25% equity stake in your business.
Accelerators: These are growth programmes designed to help your startup ‘put the pedal to the metal’ so to speak. They deal with ideas / businesses which have been developed externally and usually take a small percentage of business equity in exchange for a number of beneficial offerings including expert mentorship, industry contacts, access to funding, short-term workspace etc. They are not to be confused with...
Incubators: These are places where ideas are developed and grown in-house by external management teams. They take a much less intense approach than accelerators whilst still offering office space, mentoring, advice, and access to services. They usually take a much larger equity stake in resident businesses and offer support over a much longer timeframe. For example, business accelerators often house startups for a maximum of 3-4 months, whereas an incubator can be home to a business for a year or more.
A/B Testing: This is a term used most often in the digital sphere and refers to the process of comparing two different versions of the same web page, to determine which one performs more favourably towards a set goal, or goals. Users of a web page will be presented with either version, and their behaviours analysed to see which of the two encourages a favourable result. A/B testing normally measures…
Conversion Rates: This simply means the percentage of users who take the action desired of them within a web page. For example, an online retailer might wish a user to click through to find out about its purchase financing options. If out of 1000 users, 30 take this desired action, then the conversion rate for this is 3%.
: I have written an article which explains this term in detail
but in short, growth hacking is like marketing, only instead of being concerned with a number of different goals, growth hacking only has one, growth! It often deviates from traditional marketing to find new, innovative, and clever ways to utilise online tools as a way of creating exceptionally fast, sustained growth.
Minimum Viable Product: If any business is to begin trading the most important thing it needs is a Minimum Viable Product often abbreviated to simply MVP. It refers to the absolute minimum level of development required of a product before it can be launched. A minimum viable product is often launched as a way of testing the long-term viability of a business offering, to discover how it should be developed, and determine whether or not updated versions of it will be successful within the marketplace.
Low-Hanging Fruit: This term is connected to lean startups and MVPs in that it refers to capitalising upon the things that a business can do with the minimum of effort to secure the maximum amount of return. ‘Gathering low hanging fruit’ is a strategy often deployed by startups to increase revenues and allow for cash to be reinvested into more lucrative products / services.
Pivoting: Quite simply the process of changing a business trajectory. Businesses often pivot in response to customer feedback, market conditions, or the identification of a more lucrative business model which relates to their original one.
Ramen Profitable: A term used to describe a business which manages to produce just enough profit to pay founder / employee living expenses, and nothing more. It comes from the ‘Ramen’ noodle range, implying that the founders of such businesses are able to afford to feed themselves basic food, and little else!
MadTech: Not nearly as exciting as it sounds, this is an emerging term which is being used more and more within business circles, and simply means those technologies which sit at the intersection of marketing and advertising. MadTech has developed in response to the changing ways that consumers make decisions, most notably online; it is used most commonly to describe technologies which find innovative ways of influencing consumer purchasing decisions, based on huge amounts of data.
FinTech: Sadly nothing to do with dolphins, FinTech is merely a term coined to describe financial technologies. It has emerged in response to the explosion in finance related technologies which have sprung into existence in recent years… you know, because actually saying ‘financial technology’ just takes too much time!