In the earlier post, we have defined some basic concepts like what is a startup, AIF, GP vs LP in a very layman way. If already not read the click on this https://thevcstories.com/category/stories/ to read that article. In this post, we will talk about some most common lingos used in the startup ecosystem.
Bootstrapping – It means to start your startup without using external or venture capital funding. Most of the operations were fueled by the internal cash flow generated by the business or founders can also get their first cash from the three F’s that is Friends, Family, and Fools. So if you are proving your hypothesis and turning your startup into a successful venture without external funding, then you are bootstrapping.
Accelerator– A program that intends to accelerate the development of ideas or startup by proving mentorship, space to work, and support them to develop their concepts including a demo day. The infamous Y Combinator was the first accelerator program that started in 2005.
Incubation/Incubators – These are the same term used interchangeably with an accelerator which creates confusion. But the main difference is Incubation is the method of supporting a startup to boost its probability of surviving to turn into a more developed business. While Incubators are the rented space for the startup alongside with the business advice.
Accredited investor – It is a wealthy individual or group that has a potential interest in investing in the startup. SEBI said “any individual with a total gross income of Rs 50 lakh annually and who has a minimum liquid net worth of Rs 5 crore or any corporation with a net worth of Rs 25 crore” is eligible to be an accredited investor.
Bubble – It is a phase in the economic cycle where an industry or a company overvalued or over-inflated its valuation. When a bubble burst, it means that a lot of startups in that bubble go burst and investors lose their money.
Burn Rate – It is a rate that describes the amount a startup spends before it starts turning its cash flow positive. Most investors recommend that a startup should have at least 6 months of runway available at all time, that means if a company burning 1 lakh per month than you should have at least 6 lakh of cash available with you.
Churn Rate – The annual rate at which the customers stop subscribing to a service or start moving out before you at least regain your average customer acquisition cost.
Customer acquisition cost – It is the cost that a startup spends on its marketing to acquire customers.
Crowdfunding – Crowdfunding is a method of raising capital through the collective effort of a large number of people including friends, family, customers, and individual investors typically through social media and crowdfunding platforms—and leverages their networks for greater reach and exposure in exchange you give a small percentage of the total raised to the crowdfunding platform.
Crowdsourcing – Getting information or opinions for free from a large group of people via the internet. Social media, or using surveys.
Pitch Deck – A presentation that consists of all aspects of business in a concise and effective way, which is used to pitch your idea to investors.