Nova’s 2020 Tech Startup Programme Now Open - click here to apply
Updated 10 October 19
Whether you’re thinking of starting a startup or you’re already established and looking to grow, it’s likely that through research and discussions with colleagues, suppliers, mentors, investors, you’ve encountered the “what on earth does that mean!?” feeling.
The feeling when you’re faced with buzzwords, industry-specific terms and jargon that are slipped into the vernacular in a way that makes it clear that they’re something you should have known. Often you’ll narrow the eyes and nod politely, not wanting to let on that the last sentence may as well have been in Klingon.
This problem, unfortunately, is increasingly pertinent around tech startups. For that reason, we’ve compiled some of the most common confusion causing terms, with plain English explanations, as they’re likely to be encountered through the 6 key stages of your startup's progression.
Pre-seed: A startup is pre-seed before any money is invested in it. A ‘pre-seed’ funding round is what early-stage startups will look for to fund early stages of their development.
Lean Canvas: A 1-page ‘living’ business plan that you should update as your startup progresses. It was originally developed by Ash Maurya, a founder of the Lean Stack. The aim was to replace long complex business plans with a much ‘leaner’ single page business model.
Deck (aka pitch deck): A presentation that covers all aspects of your business in a succinct and compelling way. Often used when presenting your startup in a pitch for funding.
Value Proposition: The features or elements that make your business uniquely attractive to customers.
Exit strategy: How you plan to sell the business in the future. This is something investors like to hear before they fund your startup.
Solution bias: When you jump straight into solution mode before really understanding the problem your business will solve.
Lean Startup: The core mission of a lean start-up is to validate your business concept as quickly and cheaply as possible. You can learn more about this “movement” here.
Cofoundery: A concept created and coined by Nova. The Cofoundery model offers mentorship, guidance, investment and a full team for the first 12 months of a startups life. It’s a combination of an accelerator and an incubator with a ready-to-go experienced team who are equally as committed as the founder. Learn more about why the Cofoundery model is unique here.
Seed round: The first official investment round for a startup. At this stage, a company is usually raising money for proof of concept or to build a prototype. They tend to be referred to as a "seed stage" company.
Design sprint: A design sprint is a time-constrained, five-phase process for solving problems through design thinking, prototyping and testing ideas. Design sprints quickly align teams under a shared vision with clearly defined goals and deliverables.
Buyer persona: A fictional character created to represent a user who would use your product. Your buyer persona will inform product, design and marketing decisions to help you appeal to your target audience.
Vaporware: A product you are selling, but have not actually made. Vaporware is a way to test market demand, and see whether people actually want your product or service.
MVP: Stands for a minimum viable product. This is a product which has just enough features to satisfy early customers whilst providing feedback for future product development.
SaaS: Stands for ‘software as a service’. SaaS is a software product that is hosted remotely, usually over the internet i.e ‘in the cloud’.
A/B Testing: An experiment where you compare two variants by showing users them at the same time and seeing which performs better. For example, you could show two different versions of copy on your website and see which copy achieves a high conversion rate.
Gamification: The application of elements of gameplay to other areas of activity. This technique is typically used to encourage engagement with a product or service.
Series A: A funding round meant for the optimisation of your startup’s product or user base and push a potential profit generating idea.
Traction: Proof that people are actually buying and using your product or service.
Iterate: Trying something out, learning from what could be improved on, and doing it again in a slightly different way to achieve a better result.
Pivot: A course of correction for startups based on findings in user testing and analysis. A startup could choose to pivot for things like discovering people don’t want their product, or if they realise they’re selling to the wrong market.
Early adopters: Some of the first people to use your product or service. Early adopters are arguably the most influential customers within the market as they tend to be thought leaders, encouraging other people to follow in their steps.
Beta: The initial testing stages of a product or a company that relies heavily on feedback from beta testers. Products in beta are testing the technicality of the product, not the concept or idea. For example, this could be looking for bugs in the code.
Disruptive: When your innovation or technology challenges an existing market. This includes offering a lower price, displacing old technology, or changing the market audience.
Series B: A funding round focused on advancing a startup beyond the development stage by expanding the company’s market reach.
Freemium: A business model that allows users to access basic features for free with an option to pay for more advanced services. This model is commonly used in internet-based businesses, particularly web and mobile apps.
B2B (Business to Business): When a business sells their product to other businesses.
B2C (Business to Consumer): When a business sells their product directly to the consumer. In this scenario, the consumer is the end-user and customer of the product or services on offer.
Daily active users: The number of users who engage with your product on a given day.
Series C: A funding round that aims to scale up your startup in this stage. There is a substantial inflow of capital to up returns and tackle competitors. Recruiting additional team members might also take place at this point.
Burn Rate: How fast you’re burning through your money. It’s not unusual for a start-up to lose large amounts of money for a number of years before breaking even or making a profit.
Churn Rate: The annual percentage rate at which customers stop subscribing to your product or service (this only applies to subscription-based businesses). Due to churn rate, your projected growth might not look how you think it will.
Activation rate: The rate at which your acquired customers become active customers by initiating an activation ‘event’. This could be the number of people who download your app or the number of people who click on a certain URL in an email campaign. Startups generally use activation rates as a way of measuring the success of a campaign.
Hockey stick: When a startup experiences steady growth and then it rises suddenly. When this is represented on a graph, it looks a bit like a hockey stick, hence the name.
Unicorn: A unicorn is a startup valued at over $1 billion. The term was coined in 2013 by venture capitalist Aileen Lee. She chose the mythical animal to represent the statistical rarity of such successful businesses.
These are just a few of the most common startup terms. You’re likely to come across more along the way, but hopefully this guide can equip you to deal with at least some of them.
If there’s any more you've encountered or any that you’d like us to add, let us know in the comments!