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Congratulations. You’ve proved you know your market, your startup is a viable idea and it’s time to think about expanding. But now you’re faced with a new world where it can feel like everyone is speaking a different language: what’s the difference between a gazelle, a unicorn and an angel? And do you know your EBITDA from your EOP? This handy list of essential business acronyms and jargon could help you translate what your new contacts are talking about …
Game changer – you, your company and your product, right? Walk tall.
Bootstrapping – funding your company with your personal resources or the company’s own revenue.
Cocktail pitch – AKA a one liner: your concept and business model in a single sentence designed to inform and intrigue investors – as well as your …
Elevator pitch – delivered succinctly enough for you to deliver it in the time it takes to ride a lift. In practice, these tend to run a little longer, but it’s bad form to still be delivering it 15 minutes later.
Swot analysis – Strengths, Weakness, Opportunities, Threats. Shows what’s great about your product, what’s wrong with your product, where and how you can sell your product and who’s going to try and stop you. Better than a …
Sniff test – or quick assessment of your MVP.
MVP – Minimum Viable Product. The quickest possible product you can produce to see if there’s a demand.
PMF – Product Market Fit. When you have enough paying customers that your revenue exceeds your expenses. Then you can …
Scale – literally, size. Practically, whatever you have that’s …
Scaleable – the inherent potential in your product that can be rapidly repeated almost anywhere and satisfy a huge demand.
Related: Create awareness & reach out to more people
Scale up – taking your great idea, gathering investment and expanding your business. However, only small companies expanding quickly get to call themselves a Scaleup.
Angels – an old Broadway term now referring to early stage investors using their own money as opposed to …
Venture capital (VC) funds – which are investment funds that manage the money of private investors who seek equity in high-growth potential businesses.
ROI – what Angels want from you: a Return on Investment further down the line in exchange for their risky early investment.
Gazelle – investor slang for a high-growth company with revenues growing at least 20% annually, typically for four years or more. As in leaping like a gazelle. If things go well, you’ll grow into a …
Unicorn – a company valued at more than $1bn, and theoretically as rare as a mythical beast.
Decacorns – companies valued at more than $10bn including Uber and Snapchat, whose recent performance suggests their investors might be happier with a …
Dragon – rarer than unicorns, no matter what the fairy tales say. A dragon is a company that grows so successfully it returns all investors money. Stats suggest only one in four unicorns are dragons, which explains the old Silicon Valley saying: “Unicorns are for show. Dragons are for dough.”
Burn Rate – the speed at which a company spends cash, usually over a month. Ideally not too fast and not too slow. One way to reduce your burn is through …
Sweat equity – shares in your company given to employees or investors for work done rather than cash invested – slightly different to your …
ESOP – or Employee Stock Option Plan, which offers shares in your company to employees to incentivise staff to stay with the company.
Related: You can now raise funds for your business on BEAM
Vest – how the options in your ESOP gain value over a pre-determined amount of time.
Pivot – what happens when you realise that the small wooden office message board with a spring loaded paper holder you spent so long perfecting would sell much faster as a mousetrap. Recognising potential failure and adjusting to create success, in other words.
ARR – Annual Recurring Revenue … when you look back at your Monthly Recurring Revenue (MRR) over the Last Twelve Months (LTM).
EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortisation … essentially a measure of profits. First coined in the 1980s by city firms mounting buyout bids through heavy borrowing. Strips out expenses that can muddy a company’s day-to-day performance. Now used by investors as a measure of how much money a young company is making. Handle with care – it can make your company look cheaper than it really is.
Avoid vanity metrics – measuring your success with data that validates your personal decisions but offers no solid business insights, such as quoting huge growth percentages without offering any context.
GAAP – Generally Accepted Accounting Practice. Shorthand for the rules on what’s needed in your company’s published accounts – as set by the UK’s FRC or Financial Reporting Council. The only way to communicate real success.
Hockey stick – the shape of the growth curve VCs dream of, as it describes a company that doubles sales every year, leading to an …
Exit – whether you sell, IPO (Initial Public Offering/floating on the stock market) LBO (Leveraged Buy Out, where someone borrows money in a takeover bid) or any other way out, there are really only two exits: a good one and a bad one. Finding the right advice at the right stage is the best way to secure a …
Home run – when your company has an exit that returns 20 or more times investors’ initial capital. Game changed.
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