Raising finances for startups may seem an uphill task, also pitching an idea requires using language that your potential investors understand. It would be a difficult task for any startup seeking to raise finances and learning the technicalities associated with it. To convert ideas into reality, aspiring startups need to share their plans for growth and the targets they set with potential investors.
The first thing for startups to learn is to understand these jargons associated with raising money and extracting the maximum benefits out of it. Knowing these jargons will not guarantee any startup of raising finance from investors in any way, but having knowledge of it has no harm.
1)Incubator: These are places where you are provided with mentorship, a space to work and may be provided cash support initially to get any startup from the ground-up.
2) Disruptive Technology: Any technology that could change the very dynamics of way things are being done could be referred to as disruptive. Examples associated with this could be an Apple iPhone or Uber!
3) First Mover Advantage: It means aspiring entrepreneurs/startups are first into the market with a new unique idea, that may give them an advantage to capture the domain.
4) Burn Rate: It refers to the amount of cash being spent by a startup, which may mean losses for several years before breaking even.
5) Exit Strategy: How does a startup plan to sell their company? Who will be interested in acquiring your business and ensuring that the investors receive more than their share of what they invested.
6) Fremium: A business model in which basic services are provided free of charge. To procure premium services, a fee must be paid. For example, in the Google Play Store, applications are available on freemium model but some require an in-app purchase to unlock these premium services.
7) Growth Hacking: Using non-conventional means to quickly accelerate growth of a startup, for example using social media.
8) Minimum Viable Product: A product that has minimum possible features which make it ready for shipping for early adopters to view and purchase.
9) Pivot: It pinpoints towards the business model which may require changing, in light of losses suffered or not being commercially feasible.
10) Monetization: It refers to how a product is being sold or services rendered by a startup in order to generate revenues. Or for example, how a startup forecasts it will earn money from the product it sells.
11) Valuation: Startups have a market value, how much their business is worth etc.
12) Lean Startup: It is a scientific way of initiating and managing startups, ensuring the product gets into the consumer hands faster. The lean startup acts as a guidance tool on how to assist a startup, how to steer, when to turn, when to keep persisting and grow a business with increasing acceleration.
13) Low Hanging Fruit: The easiest way for a startup to earn money quickly. It is hard to pinpoint but crucial for startups success.
14) Bleeding Edge: It is the cutting edge of technology, something astronomical which makes a startup believe they are right there or its business model is one of a kind.
15) B2B: It references to a startup business selling its product or services to another company.
16) B2C: It references to a startup business selling its products to consumers at large i.e general public.
17) Leverage: A startup using technology to their benefit. For example, it means using anything to the advantage of their business.
18) Traction: It means the public is buying and using your products in reality. For example Daraz.pk selling smartphones or a variety of other products.
19) Return on Investment (ROI): The return given to the venture capitalist on the money invested by it in the startup.
20) Software As A Service (SAAS): A startup using subscriptions to sell their product. For example, Eccountant, a Pakistani startup, provides web based bookkeeping solution with a subscription tier.
21) Seed Capital: It is the initial capital or finances required to start a startup. This kind of funding usually comes from business owners, family members or friends.
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