The language of startups

October 6, 2012

Founding team: The group that founds a startup is typically composed of a "hustler" (the person who finds customers and financing) and a "hacker" (the engineer).

Bootstrapping: Starting a company without help from outside investors and instead relying on internal sources of cash and personal savings.

Accelerator: A program that offers fledgling entrepreneurs a small amount of seed capital (usually from $25,000 to $200,000) and intensive training over a few months to get them on their feet in return for a small slice of the company's equity.

Angel: A wealthy early-stage investor, typically a successful entrepreneur or retired technology executive, who provides seed financing and guidance to young entrepreneurs.

Seed financing: Early stage fundraising, typically raising less than $2-million.

Series A financing: The first significant financing for a company, usually bringing in respected, deep-pocketed venture capitalists.

Pivoting: Completely changing your business model and orientation well after going out to raise money from investors.

Liquidation preference: Upon the sale of a company, giving certain investors first rights to claim a return equivalent to a multiple of their original investment, before other shareholders get any money.

Scale: The key consideration for any tech company, as in "Does it scale?" The ability to increase your customer base massively without having to make significant infrastructure investments.

Exit: An acquisition or initial public offering.

Hitting a wall: The day a company runs out of money.


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