What do you mean by...?
The entrepreneurial ecosystem comes with a lot of jargon. Here are a few definitions to help with orientation.
+ Company Stage
Idea stage: entrepreneurs have little more than an unproven idea, so the focus is on testing the idea and identifying a product-market fit.
Startup: company is in the process of being set up.
Early-stage: may have initial market traction but require futher funding and will likely not yet be generating profits. (Elevate/Elevar works with early-stage companies.)
Growth stage: demonstrate viability, growth and potentially profitability.
Valuation: the analytical process of determining the current (or projected) worth of an asset or a company. Some common methods of determining a company’s valuation include looking at the business’s management, capital structure, future earnings, and the market value of its assets.
Run rate: refers to the financial performance of a company based on using current financial information as a predictor of future performance. Run rates are helpful in formulating performance estimates for companies that have been operating for short periods of time.
+ Money vs Capital
Money: refers to the instrument used to purchase goods and services and serves an immediate purpose.
Capital: a term for financial assets, such as funds held in deposit accounts, as well as for the physical factors of production; that is, manufacturing equipment. Additionally, capital includes facilities, including buildings used to produce and store manufactured goods. Materials used and consumed as part of the manufacturing process do not qualify as capital. To be qualified as capital, the goods must provide an ongoing service to the business to create wealth.
Economic capital: the estimated amount of money needed to cover possible losses from unexpected risk.
Financial capital: In a sense, anything can be a form of financial capital as long as it has a monetary value and is used in the pursuit of future revenue.
Assets: any resource owned by a business.
Equity: the owner/investor’s share of the assets of a business. Equity consists of capital plus accumulated profits.
Financial structure: refers to the mix of debt and equity that a company uses to finance its operations. This composition directly affects the risk and value of the associated business.
+ Social Impact Metrics
Standard metrics: usually established by research institutes and tend to be organized around thematic areas. Examples include GIIRS, IRIS, BOND, etc.
Custom metrics: usually created by an organization to be more applicable to their particular context.
Outcome metrics: track change that has occurred because of an organization’s efforts
Why is measuring impact important? Your organization gains credibility with investors and the public. This data will help make future investment decisions.
+ Revenue vs Profit
Revenue: the total amount of money generated by the sale of goods or services related to the company’s operations
Profit: the total amount of revenue remaining after accounting for all expenses, debts, additional income streams, and operating costs
Revenue stream: the amount of money a company receives from selling a particular good or service. Examples of revenue streams include transaction-based, service, project, and recurring revenue.
Market: any place where two or more parties meet to engage in an economic transaction.
Target market: a specific group of consumers at which a company aims its products and services.
Market mapping: a study of various market conditions that is plotted on a map to identify trends and corresponding variables between consumers and products. Market mapping can help companies locate problem areas and figure out the source of problems by examining related variables.
Competitors: a person, business, or organization that competes against your company, often offering a similar product at similar prices.
Distribution channels: a chain of businesses or intermediaries through which a good or service passes until it reaches its end customer. Examples of distribution channels include wholesalers, retailers, distributors, and the Internet.
Value Proposition: refers to the value a company promises to deliver to customers should they choose to buy their product. A value proposition is also a declaration of intent or a statement that introduces a company's brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.
Employee Count: the number of employees in a company.
Unit cost: a total expenditure incurred by a company to produce, store, and sell one unit of a particular product or service. Unit costs are also called the cost of goods sold or the cost of sales.
Incorporation: the legal process of declaring a corporate entity as separate from its owners.
Business model: a high level plan for profitably running a particular business in a specific market. Common components include a value proposition, costs, partnerships, competitors, etc.
Traction: refers to the progress a startup makes and the momentum it gains as it grows. Companies often rely on customer response and revenue as indicators of traction.
+ Investor/Startup Relationship
Stakeholder: a party that has an interest in a company and can either affect or be affected by the business. Typical stakeholders include investors, employees, customers and suppliers.
Board of Directors: a group of individuals elected to represent shareholders. A board’s mandate is to establish policies for corporate management and oversight, making decisions on major company issues.
Hurdle investments: when a startup gets money from an accelerator program in chunks after achieving certain goals (revenue, funding, growth, etc.)
NDA: Non Disclosure Agreement where one or more parties agree to not disclose confidential information that they have shared about each other as a function of doing business together.
Information rights: usually a quarterly update and the right to know the financial standing of a company.
Due Diligence: an investigation of a potential investment or product to confirm all the facts and may include the review of financial records. Due diligence refers to the research done before entering into an agreement or a financial transaction with another party.
Business exit strategy (to make a profit): usually an entrepreneur’s plan to sell their ownership in a company to investors or have an initial public offering (IPO). An exit strategy allows a business owner to liquidate their stake in a company and potentially make a substantial profit.
Business exit strategy (if business is unprofitable): an entrepreneur’s carefully outlined plan to limit losses. Note: exit strategies are usually drafted before the company is launched
Pre-Mortem: a managerial strategy in which a project team imagines that a project or organization has failed, and then works backward to determine what potentially could lead to the failure of the project or organization.
Initial public offering (IPO): the process of offering shares of a private corporation to the public through stocks.