Startup Glossary

This has been created because there are some confusing terms out there. Here are some explanations to fill in those gaps.

Note: Most Wikipedia articles will have excellent related content at the bottom of them. Make sure to look for them but do not get caught up too much as you need to stay focused in order to start your new business or keep the current one going.

Business Plan

A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that timeframe.

Source: http://en.wikipedia.org/wiki/Business_plan

Pitch Deck

In business, a pitch deck (or slide deck) is a slideshow presentation that summarizes the business idea and business model of a startup company. It is used as a visual aid when presenting the market opportunity and revenue opportunity of a business venture to potential investors. A carefully crafted pitch deck is a fundraising fundamental and is often requested by angel investors and venture capitalists prior to a company’s pitch presentation.

Source: http://en.wikipedia.org/wiki/Pitch_deck

Lean Startup

“Lean Startup” is a largely theoretical methodology for developing businesses and products first proposed in 2011 by Eric Ries. Based on his previous experience working in several US startups, Ries claims that startups can shorten their product development cycles by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and what he calls “validated learning”. Though still largely unsubstantiated, Ries’ overall claim is that if companies, especially startups, invest their time into iteratively building products or services to meet the needs of early customers, they can sidestep the need for large amounts of initial project funding and expensive product launches.

Originally developed in 2008 by Eric Ries with high-tech companies in mind, the lean startup philosophy has since been expanded to apply to any individual, team, or company looking to introduce new products or services into the market. Today, the lean startup’s popularity has grown outside of its Silicon Valley birthplace and has spread throughout the world, in large part due to the success of Ries’ bestselling book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.

Source: http://en.wikipedia.org/wiki/Lean_Startup

Lean Canvas

Business plans take too long to write, are seldom updated, and almost never read by others but documenting your hypotheses is key.

Lean Canvas solves this problem using a 1-page business model that takes under 20 minutes to create.

Source: http://leancanvas.com

VCs (Venture Capitalists)

A venture capitalist is a person that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments. A venture capital fund refers to a pooled investment vehicle (in the United States, often an LP or LLC) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. These funds are typically managed by a venture capital firm, which often employs individuals with technology backgrounds (scientists, researchers), business training and/or deep industry experience.

Source: http://en.wikipedia.org/wiki/Venture_capital#Venture_capitalists

Venture Capital

Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc.

The typical venture capital investment occurs after the seed funding round as growth funding round (also referred to as Series A round) in the interest of generating a return through an eventual realization event, such as an IPO or trade sale of the company. Venture capital is a subset of private equity. Therefore, all venture capital is private equity, but not all private equity is venture capital.

Source: http://en.wikipedia.org/wiki/Venture_capital

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