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Basic Startup terminology | Know these terms before starting your Startup!

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If you have ever started to learn something you start with its fundamentals because it’s a must to excel in any area. So, if you are planning to work on an idea for your startup brush up your basics before starting!


What are Startups?

A Startup is a company build to grow at an accelerated rate. A high growth company sustains on capital investment prior to profitability. A Startup can be compared to a seed which initially needs proper care to develop into a mature tree so that later it can beer fruits and attain huge heights.

What is an idea Validation?

Idea Validation is one of the most important parts of startups in the early stages. One should validate their idea before investing time, energy and capital on their startup. Idea validation can be done either offline or online via a google form, twitter or any other source depending upon your startup idea.

Why Pitch your Startup idea?

If you are among the founders of your company you have to pitch your startup idea a thousand time before investors, friends, and family. Pitch is a kind of professional presentation where you present a problem on which you are working and what kind of unique solution you as a company are providing to the given problem. Pitch also includes all the numbers of your startup like the customers, sales, revenue, expenses, funding, valuation, etc.
It’s very important to pitch your idea in front of the market leaders to get the proper advice and feedback on your idea/work as a company.

What is funding?

As startups are high paced companies, therefore, it requires external funding options to survive apart from their founders’ investment. Cash not only allows startups to survive but also provide a competitive advantage from competitors by hiring key staff, marketing, public relation, and sales. Therefore it’s a must for startups to raise money.

Who all are Angel investors and Venture Capitalist (VCs)?

Angels and VCs both invest money in startups but in a different way. Angels generally invest their own money on their own term while VCs invest other people money and requires a lot of meetings and discussions before making an investment.VCs see lots of deals on a daily basis, therefore, one has to stand out among the crowd to grab the funding. On the other hand, Angels majorly have limited reach and their decision takes less time compared to VCs.
See also  Endowment Effect: Why it matters in business?

How to calculate your startup Valuation?

Some companies find their valuation at about $1mn and some at $5mn it depends on what investors see its valuation in present or in the near future. In some situations, it’s difficult to find an investor to know your company’s exact value, in that case, one should choose valuation by looking at comparable companies in their market.

What are incubators and accelerators?

Incubators provide more of a help to founders to transit their idea into a company. They work on an open timeline and some time takes even more than a year for mentoring startups.
While accelerators work with mature stage companies and accelerate their growth with a business model in place. They work on a period of 3-4 months under the mentorship and capital provided by the accelerator and at the end of the program, they have the opportunity to pitch in front of investors.

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