Bazillion Dollar Club Terms

Monday, August 24, 2015 - 16:09

There are some terms you may have heard used in discussion of the world of start-ups and Silicon Valley. Some of them might make zero sense. It's all good, because the below is (we hope) a helpful glossary of terms you may have come across in your travels - and you most certainly will hear during the course of Bazillion Dollar Club's first season. On that note, don't miss the series premiere on Tuesday, September 22 at 10/9c.

A

  • Accredited Investor: Someone rich enough and/or knowledgeable enough to make investments, according to specific criteria under financial regulation laws. Accredited investors include high net-worth individuals, VCs, banks and other large corporations who choose to make high-risk investments (such as in venture capital or hedge funds, or startups & private companies). In the US, an accredited investor is someone with $1,000,000 liquid net worth, or who has earned at least $200,000 a year for the past two years (or $300,000 if adding their spouse's income).
  • ARR: Annual Recurring Revenue - The amount of revenue generated by a business in one year, typically extrapolated from the most recently monthly revenue (x 12).
  • Angel/Angel Investor: Someone who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. Typically this is someone who is rich, but not always.
  • AngelList: A website that connects startups with investors to help companies raise capital.

B

  • BOM: Bill of Materials
  • Burn Rate: The amount of money a business spends, typically stated over a 1-month period. Net Monthly Burn Rate describes the amount of expenses less income in 1 month.

C

  • CAD:  Computer Aided Design
  • Cap Table: A list of all the investors in a company over time, including their investment amounts for each round and the associated common or preferred share ownership in the company. This is typcially recorded in a spredsheet or online database.
  • CMF: Color Material Finish
  • Common Shares: Shares of ownership in a company, usually reserved for non-investors such as founders, employees and advisors. Common shares typically have less substantial control and voting priveleges compared to preferred shares, and are usually lower in value/cost at the early stages of a company.
  • Crowdfunding: A method of raising money online from investors and/or customers. Platforms such as AngelList, FundersClub, KickStarter and IndieGogo are examples. 

D

  • Demo Day: The day when the companies present their businesses to investors at the end of the accelator program. 
  • DFM: Design for Manufacture
  • Drip Campaign: A series of emails that leads potential consumers through the path to purchase.

E

  • EE: Electrical Engineer
  • Elevator Pitch: 30-second pitch for investors about a startup.
  • EVT: Electronic Verification Test

F

  • Firmware: Permanent software programmed into a read-only memory.

I

  • IOT: The "Internet of Things."

K

  • Kickstarter: A website that connects startups with potential customers or donors for crowdfunding.
  • KPI: Key Performance Indicators, or metrics on how a business is doing (ex: monthly revenue, growth rate, margin, burn rate, etc).

L

  • LL: Looks Like prototype - Not functional, but a visual representation of product
  • LTV/LCTV:  Lifetime [Customer] value. The expected total dollar value of a customer over their "life" using the product or business.

M

  • ME: Mechanical engineer
  • Metrics: Measure of an organization's activities and performance. Example metrics could be the number of app downloads per month, the number of active users per month, monthly revenue, expenses or growth rate.
  • MRR: Monthly Recurring Revenue. The MRR is a measure of how much revenue is generated by a business in one month.
  • MVP: Minimum Viable Product. A term used to describe the bare minimum of functionality required to satisfy a user or customer. 

O

  • ODM: Original Design Manufacture
  • Organic Acquisition: Getting customers for free via "word of mouth" or other unpaid channels.

P

  • Paid Acquisition: Paying to acquire customers, such as via online advertising, affiliate advertising or other "non organic" (free) methods.
  • PCB: Printed Circuit Board
  • POC: Proof of concept, or also the person who is the point of contact for a startup founder at an accelerator. 
  • Pitch: A concise speech about your company, including story and traction to sell to possible investors.
  • Pitch Deck: A set of visual slides used to accompany the pitch. In this case it is what our companies build to use on Demo Day.
  • Preferred Shares: Shares of ownership in a company, usually reserved for investors such as angels and venture capitalists. Preferred shares typically have more substantial control and voting priveleges compared to common shares, and are usually higher in value/cost at the early stages of a company. 
  • Pre-Money: The proposed valuation of a company before receiving investment.
  • Post-Money: The suggested value of a company after receiving investment, which is typically the sum of the pre-money valuation, plus the total amount of investment capital in a round of financing. 
  • Prototype: A minimal, preliminary model of a product either software or hardware or both, from which other future products are further developed or improved. 

T

  • Term Sheet: a bullet-point document outlining the material terms and conditions of a business agreement. After a term sheet has been "executed", it guides legal counsel in the preparation of a proposed "final agreement".
  • Traction: Traction is proof that somebody wants your product. Ideally, it should communicate momentum in market adoption. Examples include: growth or acceleration revenue, app downloads, customer usage, profit, active or registered users, engagement, enterprise pilot trials, strategic partnerships, etc.

U

  • Unit Economics: A simple measure of the income and expense associated with a single customer or transaction.

V

  • Valuation: In finance, valuation is the process of estimating what something is worth. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (e.g., bonds issued by a company).
  • VC: Venture Capitalist. A person who makes venture investments.

W

  • Wit: A third-party speech-to-text server.
  • WL: Works Like Prototype. A functioning prototype that does not look like the final product.