From Seed to Scale: 10 Essential Entrepreneurship Terms

The world of startups and entrepreneurship has a unique and fast-paced vocabulary. Whether you're a founder, an investor, or working at a startup, understanding these key terms is essential for effective communication. This guide explains 10 fundamental concepts that trace the journey of a new venture.

To really master this vocabulary, the BizVoc app provides dedicated decks to help you learn and retain these critical terms.

Key Entrepreneurship Vocabulary

• MVP (Minimum Viable Product)

  A version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

  Instead of building the full application, we launched an MVP to test our core assumptions with real users.
• Seed Funding

  The first official equity funding stage. It typically represents the first official money that a business venture or enterprise raises.

  The startup secured $500,000 in seed funding to hire its first engineers and build the MVP.
• Venture Capital (VC)

  A form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential.

  After proving their business model, the company sought a Series A round from several venture capital firms.
• Bootstrapping

  Building a company from the ground up with nothing but personal savings, and with luck, cash coming in from the first sales.

  Before they raised any outside capital, the founders were bootstrapping the company for two years.
• Pivot

  A fundamental change in a startup's business strategy to test a new business model or product after receiving feedback.

  When they realized their initial target audience wasn't buying, the company made a successful pivot to the enterprise market.
• Scalability

  The ability of a business or system to grow and manage increased demand. A scalable business model can increase revenue with minimal incremental cost.

  Our cloud-based software has high scalability, allowing us to serve millions of users without a linear increase in costs.
• Burn Rate

  The rate at which a company is losing money. It is typically quoted in terms of cash spent per month.

  With a burn rate of $50,000 per month and $500,000 in the bank, we have a runway of 10 months.
• Runway

  How long your company can survive if your income and expenses stay constant. It's calculated by dividing the current cash position by the monthly burn rate.

  We need to secure new funding within the next six months to extend our runway.
• Acquisition

  A corporate action in which one company purchases most or all of another company's shares to gain control of that company.

  The startup's successful acquisition by Google was a huge win for its early investors.
• Exit Strategy

  A contingency plan that is executed by an investor, trader, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria have been met or exceeded.

  The founders' exit strategy was either to go public through an IPO or be acquired by a larger tech company.

Speak the Language of Innovation

Understanding these terms is the first step to confidently navigating the startup ecosystem. They are the building blocks for discussing strategy, funding, and growth.

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