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Entrepreneurial Key Terms
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Venture Capital
Financing provided by firms or funds to small, early-stage, emerging firms that are deemed to have high growth potential.
Startup
A company in the first stages of operations, often characterized by high uncertainty and risk.
Market Analysis
The study of the attractiveness and dynamics of a special market within a special industry.
Business Model
Plan implemented by a company to generate revenue and make a profit from operations.
Bootstrapping
Building a company without external help or capital and relying on personal finances and revenue from the business.
Angel Investor
An affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
Burn Rate
The rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations.
Minimum Viable Product (MVP)
The most pared-down version of a product that can still be released to market with a core set of features that allows it to be deployed and tested.
Proof of Concept (POC)
Demonstration to verify that certain concepts or theories have the potential for real-world application.
Scale-Up
The process of increasing the size or scope of a business's operations.
Lean Startup
A methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable.
Pivot
A structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.
Crowdfunding
The practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet.
Social Entrepreneurship
The use of startup companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues.
Incubator
An organization designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services.
Accelerator
A fixed-term, cohort-based program that includes mentorship and educational components, culminating in a public pitch event or demo day.
Exit Strategy
A planned approach to exiting a business which aims to reduce or liquidate one's stake in a financial asset.
Value Proposition
An innovation, service, or feature intended to make a company or product attractive to customers.
B2B
Business-to-Business, describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
B2C
Business-to-Consumer, describes activities of businesses serving end consumers with products and/or services.
Competitive Advantage
Conditions that allow a company or country to produce a good or service at a lower price or in a more desirable fashion for customers.
SWOT Analysis
A framework for identifying and analyzing the internal and external factors that can have an impact on the viability of a project, product, place, or person.
Elevator Pitch
A succinct and persuasive sales pitch that is theoretically the time it takes to ride an elevator.
Early Adopters
The first customers who use a new product or service after the innovators have already tested it.
Business Plan
A formal written document containing business goals, the methods on how these goals can be attained, and the time frame for achieving them.
ROI
Return on Investment, a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
Disruptive Innovation
An innovation that significantly alters the way that consumers, industries, or businesses operate.
Mentorship
Guidance provided by a more experienced person to a less experienced person within a company or industry.
Cash Flow
The net amount of cash and cash-equivalents being transferred into and out of a business.
Equity Financing
The method of raising capital by selling company stock to investors; in return for ownership shares, the company receives cash from the shareholders.
Debt Financing
When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors.
Organic Growth
Growth rate a company can achieve by increasing output and enhancing sales internally, without mergers, acquisitions, or takeovers.
Market Penetration
The amount of a product or service that is sold to its target customers, compared to the estimated total market for that product or service.
Market Segmentation
The process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics.
Brand Equity
The value premium that a company realizes from a product with a recognizable name when compared to its generic equivalent.
Balance Sheet
A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
Income Statement
A financial statement that measures a company's financial performance over a specific accounting period.
Leverage
The use of various financial instruments or borrowed capital—such as margin—to increase the potential return of an investment.
Liquidity
The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
Opportunity Cost
The cost of an alternative that must be forgone to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
Profit Margin
A measure of profitability. It is calculated using the formula: Profit Margin = Net Profit / Revenue.
Supply Chain
A system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.
Total Addressable Market (TAM)
The total market demand for a product or service. It is the most amount of revenue a business can possibly generate by selling their product or service in a particular market.
Unique Selling Proposition (USP)
The factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition.
Working Capital
The capital of a business that is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.
Innovation
The process of translating an idea or invention into a good or service that creates value or for which customers will pay.
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