Home >> Business Ecosystem >> Business Glossary

Business Glossary

Agile Company
A company that can move quickly and easily, promotes adaptive planning, evolutionary development and delivery and encourages rapid and flexible response to change.
 
Angel Investor
An individual, who is willing to invest in an early stage start up company.  Angel investors are considered one of the oldest capital sources start-ups
 
Burn Rate
The rate that a new company uses up its investors to finance costs before generating positive cash flow from operations, it could be considered as a measure of the negative company cash flow until it reaches the break even point.
 
Bootstrapping
AKA “booting” refers to the period where entrepreneurs are self sustained, without external help.
 
Bootstrap Startup
Bootstrapping in the startup “lingo” means the launching of a low budget venture, which means that you will most likely outsource some of your R&D, servers, work from home and have zero salary. You will most likely pay for legal and accounting services. The rest? you’ll need to pick up yourself and manage as you go along.
 
Business Plan
The business plan describes the business, its goals and objectives, the business strategies, the target market and “go to market plan” and the financial forecasts. It basically shows how well your business will run.
 
Business Model
The Business Model is a strategic template for developing new existing business models. It is a visual description of the firm’s value proposition, infrastructure, segments and customers, and finances. It basically describes how your company will create, deliver and capture value.
 
Customer Development Model
The Customer Development Model is created by actually talking to the customers and developing a product or service they are interested in. to do that the startups should to get early and frequent customer feedback prior to developing their products too far down the “R&D” line.  
 
Disruption
An new product or service that creates new markets and segments, by doing so it disrupts an existing market and value network. Usually that means the lunch of a new technology that improves a product or service in new ways such as new design for new segments,  new market and better pricing or total value proposition.  
 
Elevator Pitch
The elevator pitch is a very concise, very planned, and very well trained methodology to provide  a description of your venture that the “guy next door” would understand in the time it would take the elevator to go up or down.
 
Entrepreneur
An entrepreneur is a person who is willing to take financial risks and create new business ventures. The word comes from French “entre” (to enter) & “prendre” (to take), and in a generally is applicable to anyone who is starting a new venture.  
 
Equity
The term means the ownership of any asset, after all debts related to such asset are paid off. i.e. equity = Assets – Liabilities. In the startup scene, it is usually describes the venture giving up a  part of the business in exchange for money.
 
Executive Summary
An executive summary, AKA management summary, summarizes the business plan key messages in a concise manner helping the reader to become rapidly acquainted with the business opportunity, therefore, it must be short and to the point.
 
Business incubator
Business incubators are programs that provide support to the development of start up ventures through a mechanism of  a business support ecosystem managed by the incubator management team and mentors.
 
Lean
Maximize customer value while minimizing cost. lean actually means the creation of higher   customer value for with less resources.
 
Non Disclosure Agreement (NDA)
The non-disclosure agreement (NDA), is a confidentiality agreement, which is made between legal parties in order to not to disclose any information shared.
 
Venture Capital (VC)
A VC provides long-term capital to companies in order for them to achieve growth and success. VC vary from taking a usual loan by the VC being invested in the business in exchange for equity, thus, as shareholders, the VC’ returns are dependent upon the actual growth and success of the business, therefore, VC’s are mainly interested in ventures representing high growth potential with experienced and ambitious management teams who can turn their plans into an reality.
 
Business Valuation
It is an estimate of the worth of a business actual and future assets.
 
Due Diligence
A process that is conducted by potential investors or experts on their behalf, it is actually a type of an investigation analyzing the risk of the investment and authenticating the company’s displays. During the process the sales and profit data, assets, liabilities, business plans, contracts, key employees and customers, intellectual property, technology and any critical business factor is being scrupulously reviewed.    
 
Early Stage
It means seed financing for startup, first stage financing or round A.
 
Initial Public Offering (IPO).
Means the first time a company is offering the sale of its shares and securities to the public thus  converting from being a private company to public company with public ownership.
 
Institutional Investors.
Non-individual investors and shareholders making investments on a regular basis. Such type of investors for example are trust, pension & mutual funds and they would invest in venture capital firms.
 
Investment Banker
An investment banker is usually a firm or an investment professional that underwrites securities, and functions as a broker, deals with corporate finance, M&A advisory services etc. Investment bankers can find investors for a fee such as percentage of the amount raised, equity or both. In some cases they charge a retainer fee.
 
Joint Venture (JV)
An JV is a legal arrangement which provides it’s parties with control of a specific business undertaking.
 
Leveraged Buyout
Means an acquisition of a company which is financed mainly by debt.
 
Limited Offering
A limited offering means the offering of securities which are exempt from registration due to existing exemptions for the limited size of this offering and the limited number of purchasers in it.
 
Mergers
Refers to a business structure where one company becomes a part of another company.
 
Options
Options are securities providing the right to buy or sell shares at a fixed date and rate.
 
Private Placement
An offering that is exempt registration and is limited in its distribution.
 
Pro Forma
A financial statement  reflects a situation as though certain transactions had already happened. For example, a pro forma balance sheet anticipating the results of the offering.
 
Prospectus
Means the main selling document in an offering provided to investors. It provides information about the investment and the company.
 
Road Show
A presentation delivered by the company's management, of a business to potential investors, brokers, and dealers in order to raise capital
 
Seed money aka seed funding
Seed is a form of securities offering where an investor buys part of a company. It is an early investment with a goal to support the business until it can generate its own income or until it is ready to raise more money and grow. 
 
Series (preferred stock) A
Series A is the first round of financing offered to the venture capital form. Series A preferred stock can be converted into commun stock later on for example when the company goes public or being sold.