Startup Terms Every Entrepreneur Needs to Know, from Accelerator to VC

Startup Terms Every Entrepreneur Needs to Know, from Accelerator to VC

Lots of terms and abbreviations get thrown around the entrepreneurial ecosystem. Some of them are common – and others sound a little bananas. But KCSourceLink has the lingo lowdown so you can decode tricky verbiage.

Our list of terms and phrases can help you ask smart questions and grow your business. Like everything else in entrepreneurship, there’s always something to learn.

Glossary of entrepreneurial terms

Accelerator: A business-development program. Accelerators are generally location-based and have a specified program and/or timeline for education and mentoring. Usually, the participating entrepreneurs function as a cohort, all participating for the same amount of time. Some accelerators take a small amount of equity. See our Resource Navigator for accelerators near you.

Angel investors: High-net-worth individuals who provide funding to startups and early-stage business that have the potential for high growth. Angels invest this capital in exchange for equity or convertible debt. Usually, they invest anywhere from $5,000 to $100,000 of their own money. Super angels typically invest larger amounts, either by themselves or cooperatively with other like-minded individuals. Learn more about KC-area angels and the resource partners that can help you perfect your pitch.

Articles of organization: A document outlining the basic details of your company. Articles of organization are required by state or local government agencies when you form a limited liability company (LLC). Here’s what you need to know about registrations, licenses and permits in Kansas and Missouri.

Bankable companies: Companies that have the collateral, track record and/or cash flow to qualify for conventional bank financing. Nonbankable companies usually need access to alternative loans or bank guarantees. Check out our guide to Kansas City-area loan funds.

Bootstrapping: Starting and growing a business with little or no money. This term comes from the phrase “pulling by your bootstraps.” It implies hard work to build a business without outside funding. Bootstrapping usually requires a ton of support. Find a program or workshop to help you.

Brick and mortar: A physical storefront. This is also known as a Main Street business. Examples include bakeries, gyms and restaurants. Learn how Main Street entrepreneurs are succeeding in KC.

Business plan: The foundation of any venture. A business plan guides an entrepreneur through each stage of starting and managing a business. It’s a tool that will help convince people to work with you or invest in your company. Check out our guide to building your business plan.

Cash flow: The total amount of money coming in and going out of a business. It’s the difference between cash that’s available at the beginning of an accounting period and at the end of that period. Cash comes in from sales, loan proceeds, investments and the sale of assets. It goes out to cover operating and direct expenses, principal debt service and the purchase of assets. Develop a cash flow forecast at a class on the KCSourceLink calendar.

Coworking space: An environment shared by many entrepreneurs and small businesses. Coworking spaces offer options like open space, individual offices and access to meeting rooms. Usage is often based on a membership fee or month-to-month rent. Check out our guide to coworking spaces in Kansas City.

Crowdfunding: Financing a project or business with small amounts of money from a large number of people. This is often done via the internet. Explore our guide to funding your business.

DBA: Doing business as. Sole proprietors use DBAs if they want to use a company name that isn’t their individual name. Larger businesses file a DBA if they don’t want to use the company’s full legal name all the time. Not sure if you need a DBA? A free Personal Action Plan can connect you with the resources to set your business up right.

Debt: The amount of money borrowed by one party from another. Companies in the startup and growth stages often take out loans to get up and running. Debt doesn’t give the lender any company ownership, and the borrower must repay debt. Here’s a list of KC-area loan providers.

More terms below …

Economic development: Efforts to improve the financial, political and social wellbeing of a community. Economic development often focuses on attracting and keeping businesses and creating and retaining jobs. Find out how these efforts have a big impact in our communities.

Elevator pitch: A short but persuasive sales presentation. It’s called an elevator pitch with the idea that you can say it all during a single elevator ride. Your sales pitch should answer “What do you do for a living?” and leave a lasting impression of you and your business. Find a class to help you perfect your elevator pitch.

Employee identification number (EIN): A unique, nine-digit number that identifies a business operating in the United States. The Internal Revenue Service assigns these numbers, and you can apply online. If you’re starting a business in Kansas or Missouri, here are the registrations, licenses and permits you need to begin.

Equity: Stock or another security that represents an ownership interest. When a company gets equity funding, it’s trading some ownership of the company for capital. See how equity fits into the business funding puzzle.

Exit strategy: A plan for transitioning ownership of a company to another company, investors or employees. Our guide to exit strategies outlines what you need to know.

Gig economy: A labor market featuring short-term contracts or freelance work instead of permanent jobs. People who drive for a rideshare app or work as musicians are part of the gig economy. See how some Kansas Citians are growing their gigs into microenterprises.

Grant: Money given to a company. It doesn’t need to be repaid and doesn’t require equity in return. Grants are available on federal, state and local levels. However, most are for nonprofit organizations, not small businesses. Find the best source of funding for your KC business.

Incubator: A business-development program that usually involves a workspace, mentoring and business-development resources. Unlike an accelerator, incubators don’t have a timeframe and ventures come and go at different intervals. Our guide to Kansas City incubators can get you started.

Innovation-led entrepreneur: A company that forms around a new technology or breakthrough process that has the potential for a large market. Also called tech or high-growth, these businesses go through the same stages as other startups, but often as a much fast pace. Our four-part guide outlines all the resources that can help you move at the speed of light.

Main Street entrepreneur: A business with a physical storefront and employees. These ventures include stores, dry cleaners and restaurants. Main Street businesses are often focused on increasing sales, maintaining cash flow and making operations efficient. Learn how successful Main Street businesses in KC are making it work.

Makerspace: Places where people with common interests can gather to work on projects while sharing ideas and equipment. Makerspaces often serve computing or technology communities. The Kansas City area is home to several active and supportive makerspaces.

Microenterprise: A company that requires little capital to launch. Most microenterprises are focused on the owner’s personal area of expertise, like lawn care or IT consulting. And they don’t require a physical location. Online businesses also fall into this category. Learn how microenterprises in Kansas City thrive.

Microloan: A very small, short-term loan. These loans typically have a low interest rate and are given to startup companies or self-employed people. Borrow smart – check out our list of trusted Kansas City-area loan providers.

Pitch deck: A PowerPoint presentation that provides an overview of a business plan. Business owners may share pitch decks with potential investors, partners, co-founders and customers. Learn how a pitch deck helped Josh Lewis land a $500K investor.

Pivot: A major shift in strategy or business plan. Pivots are often driven by customer feedback. However, COVID-19 caused many businesses to pivot dramatically. Find out how Will Brown pivoted his business for greater success.

Product development: The creation of products that offer new or additional benefits to the customer. Product development can include modifying an existing product or formulating a new product. This exercise is often focused on satisfying new customer wants or market niches. Find the Kansas City resources that can help you develop your product or prototype.

Proof of concept: Documented evidence that a potential product or service can be successful. Once a concept is validated, new business starts and follow-on funding often come next. Digital Sandbox KC helps companies with proof of concept.  

Resource Partner: A government agency, nonprofit or educational program that helps start or grow small businesses. Resource Partners are also called service providers or entrepreneurial support organizations (ESO). Business owners in Kansas City can get free or almost-free help from the hundreds of Resource Partners in our Resource Navigator.

Rollout: The introduction of a new product or service to the market. A rollout is a significant product release that’s often accompanied by a strong marketing campaign. The goal is to build awareness and excitement with consumers. See how rollout fits into your business plan with the KCSourceLink Resource Rail.

Second-stage entrepreneurship: Businesses that have moved past the startup stage but are not yet mature. These ventures have enough employees that the owner needs professional managers. A business usually enters second stage when it approaches $1 million in receipts. Learn from second-stage companies in Kansas City.

SWOT analysis: A planning method that outlines strengths, weaknesses, opportunities and threats. This analysis shows where an organization is today and where it could be in the future. See how SWOT analysis fits into your business plan.

Venture capital: Financing that investors provide to startups and small businesses that have long-term growth potential. Venture capital can come from individuals, banks or other financial institutions. Sometimes it comes not as money but as technical or managerial expertise. Investors usually get equity in the company in exchange for venture capital. Find out if this kind of funding is right for your business with our guide to venture capital in Kansas City.

Thanks to Investopedia for help with these definitions. If we missed a term, let us know. We’ll get on it ASAP.

Put a little extra oomph behind that vocabulary

KCSourceLink is here to help you on your entrepreneurial journey. Our Resource Navigator lists hundreds of programs and organizations that can help you meet your goals. And if you could use personalized guidance, we’ve got you covered. Our Network Navigators can create a free Personal Action Plan just for you. Tell us about your venture and receive a free plan individualized just for you.

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