Startup Terms Every Entrepreneur Needs to Know, from Accelerator to VC
In the entrepreneurial ecosystem, lots of terms and abbreviations get thrown around. And we’ve all had that sick feeling as we nod and pretend to know what people are talking about. But fear not! MOSourceLink has the lowdown on tricky startup lingo.
Our list of terms and abbreviations can help you ask smart questions and get your business where you want it to go. There’s something to learn in each stage of your entrepreneurial journey. So whether you’re a new entrepreneur or have been doing this a long time, let’s jump in.
Glossary of entrepreneurial terms
Accelerator: A business-development program. Accelerators are generally location-based and have a specified program and/or timeline for education and mentoring. Usually, the participating entrepreneurs function as a cohort, all participating for the same amount of time. Some accelerators take a small amount of equity. See our Resource Navigator for accelerators near you.
Angel investors: High-net-worth individuals who provide funding to startups and early-stage business that have the potential for high growth. Angels invest this capital in exchange for equity or convertible debt. Usually, they invest anywhere from $5,000 to $100,000 of their own money. Super angels typically invest larger amounts, either by themselves or cooperatively with other like-minded individuals. Check out our guide to Missouri angel investment groups.
Articles of organization: A document outlining the basic details of your company. Articles of organization are required by state or local government agencies when you form a limited liability company (LLC). Here’s what you need to know about registrations, licenses and permits in Missouri.
Bankable companies: Companies that have the collateral, track record and/or cash flow to qualify for conventional bank financing. Nonbankable companies usually need access to alternative loans or bank guarantees. Check out our guide to Missouri loan funds.
Bootstrapping: Starting and growing a business with little or no money. This term comes from the phrase “pulling by your bootstraps.” It implies hard work to build a business without outside funding. Bootstrapping usually requires a ton of support. Find a program or workshop to help you.
Brick and mortar: A physical storefront. This is also known as a Main Street business. Examples include bakeries, gyms and restaurants. Learn how Main Street entrepreneurs are succeeding in Missouri.
Business plan: The foundation of any venture. A business plan guides an entrepreneur through each stage of starting and managing a business. It’s a tool that will help convince people to work with you or invest in your company. Check out our guide to building your business plan.
Cash flow: The total amount of money coming in and going out of a business. It’s the difference between cash that’s available at the beginning of an accounting period and at the end of that period. Cash comes in from sales, loan proceeds, investments and the sale of assets. It goes out to cover operating and direct expenses, principal debt service and the purchase of assets. Find a class where you can learn more about cash flow.
Coworking space: An environment shared by many entrepreneurs and small businesses. Coworking spaces offer options like open space, individual offices and access to meeting rooms. Usage is often based on a membership fee or month-to-month rent. Check out our guide to finding the office space that’s right for you.
Crowdfunding: Financing a project or business with small amounts of money from a large number of people. This is often done via the internet. Explore our guide to funding your business.
DBA: Doing business as. Sole proprietors use DBAs if they want to use a company name that isn’t their individual name. Larger businesses file a DBA if they don’t want to use the company’s full legal name all the time. Not sure if you need a DBA? A free Personal Action Plan can connect you with the resources to set your business up right.
Debt: The amount of money borrowed by one party from another. Companies in the startup and growth stages often take out loans to get up and running. Debt doesn’t give the lender any company ownership, and the borrower must repay debt. Here’s a list of Missouri loan funds.
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Economic development: Efforts to improve the financial, political and social wellbeing of a community. Economic development often focuses on attracting and keeping businesses and creating and retaining jobs. Find out how these efforts have a big impact in our communities.
Elevator pitch: A short but persuasive sales presentation. It’s called an elevator pitch with the idea that you can say it all during a single elevator ride. Your sales pitch should answer “What do you do for a living?” and leave a lasting impression of you and your business. Find a class to help you perfect your elevator pitch.
Employee identification number (EIN): A unique, nine-digit number that identifies a business operating in the United States. The Internal Revenue Service assigns these numbers, and you can apply online. Here are the registrations, licenses and permits you need to start a business in Missouri.
Equity: Stock or another security that represents an ownership interest. When a company gets equity funding, it’s trading some ownership of the company for capital. See how equity fits into the business funding puzzle.
Exit strategy: A plan for transitioning ownership of a company to another company, investors or employees. See where your exit strategy should fit in your business plan.
Gig economy: A labor market featuring short-term contracts or freelance work instead of permanent jobs. People who drive for a rideshare app or work as musicians are part of the gig economy. See how some Missourians are growing their gigs into microenterprises.
Grant: Money given to a company. It doesn’t need to be repaid and doesn’t require equity in return. Grants are available on federal, state and local levels. However, most are for nonprofit organizations, not small businesses. Find the best source of funding for your Missouri business.
Incubator: A business-development program that usually involves a workspace, mentoring and business-development resources. Unlike an accelerator, incubators don’t have a timeframe and ventures come and go at different intervals. Our guide to Missouri incubators can get you started.
Innovation-led entrepreneur: A company that forms around a new technology or breakthrough process that has the potential for a large market. Also called tech or high-growth, these businesses go through the same stages as other startups, but often as a much fast pace. Find out how Missouri innovation-led entrepreneurs are moving at the speed of light.
Main Street entrepreneur: A business with a physical storefront and employees. These ventures include stores, dry cleaners and restaurants. Main Street businesses are often focused on increasing sales, maintaining cash flow and making operations efficient. Learn how successful Main Street businesses in Missouri are making it work.
Makerspace: Places where people with common interests can gather to work on projects while sharing ideas and equipment. Makerspaces often serve computing or technology communities. See how makerspaces can fuel into your journey on the MOSourceLink Resource Rail.
Microenterprise: A company that requires little capital to launch. Most microenterprises are focused on the owner’s personal area of expertise, like lawn care or IT consulting. And they don’t require a physical location. Online businesses also fall into this category. Learn how microenterprises in Missouri thrive.
Microloan: A very small, short-term loan. These loans typically have a low interest rate and are given to startup companies or self-employed people. Borrow smart – check out our list of trusted Missouri loan providers.
Pitch deck: A PowerPoint presentation that provides an overview of a business plan. Business owners may share pitch decks with potential investors, partners, co-founders and customers. Learn how a pitch deck helped propel Summersalt into the big time.
Pivot: A major shift in strategy or business plan. Pivots are often driven by customer feedback. However, COVID-19 caused many businesses to pivot dramatically. Find out how a pandemic pivot changed everything for Green Resources Consulting.
Product development: The creation of products that offer new or additional benefits to the customer. Product development can include modifying an existing product or formulating a new product. This exercise is often focused on satisfying new customer wants or market niches. Find the Missouri resources that can help you develop your product or prototype.
Proof of concept: Documented evidence that a potential product or service can be successful. Once a concept is validated, new business starts and follow-on funding often come next. Use our Resource Rail to see how proof of concept fits into your business plan.
Resource Partner: A government agency, nonprofit or educational program that helps start or grow small businesses. Resource Partners are also called service providers or entrepreneurial support organizations (ESO). Business owners in Missouri can get free or almost-free help from the hundreds of Resource Partners in our Resource Navigator.
Rollout: The introduction of a new product or service to the market. A rollout is a significant product release that’s often accompanied by a strong marketing campaign. The goal is to build awareness and excitement with consumers. See how rollout fits into your business plan with the MOSourceLink Resource Rail.
Second-stage entrepreneurship: Businesses that have moved past the startup stage but are not yet mature. These ventures have enough employees that the owner needs professional managers. A business usually enters second stage when it approaches $1 million in receipts. Learn from second-stage companies in Missouri.
SWOT analysis: A planning method that outlines strengths, weaknesses, opportunities and threats. This analysis shows where an organization is today and where it could be in the future. See how SWOT analysis fits into your business plan.
Venture capital: Financing that investors provide to startups and small businesses that have long-term growth potential. Venture capital can come from individuals, banks or other financial institutions. Sometimes it comes not as money but as technical or managerial expertise. Investors usually get equity in the company in exchange for venture capital. Find out if this kind of funding is right for your business with our guide to venture capital in Missouri.
Thanks to Investopedia for help with these definitions. Did we miss one? Let us know and we’ll help ASAP.
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