It’s no longer good enough to speak nerd to sound smart. Well, it's certainly not if you want to break out in Silicon Valley. Let's jump straight to the letter M and say "monetize". If you want to build it, you're going to have to monetize it and that is going to mean speaking business in addition to C++ and Urban Dictionary English.
The terminology is wide, and ever filled with buzz words, but here is a start to help follow that crucial conversation or interesting article. Whether you're interested in founding a start-up, fancy yourself an investor, or just curious, a little vocabulary will go a long way. Here is a handful of words, in alphabetical order of course, to help wade into the deep end of conversations about start-ups and venture capital.
Accelerator - Cohort based programs that nurture early stage startups with tech, eduction and business mentoring and, if really lucky, seed money. Similar to being an aspiring super model, beware of ones that want you to pay them. A reputable accelerator will be choosy about their applicants and have top-notch connections for young companies.
Bootstrapped - Ever hear the phrase "pulling oneself up by one's bootstraps"? This is essentially the same thing. There are those entrepreneurs who either have the necessary capital themselves (either their own money and/or from friends and family) or are able to monetize all or part of their product quickly enough to sustain themselves through further development and growth.
Convertible Debt - In a small nutshell (think pistachio), a loan that can be converted into equity in a company at a future, more advantageous date. If all goes well, pesky debt can be converted into equity. If all does not...Spotify is a good recent example.
Dilution - In simplest terms, the issuance of additional shares which, obviously, dilutes the value. Any dilution of stock should be evaluated as it is done for a variety of reasons and has a variety of outcomes. While the simple issuance of shares is obviously not good for existing shareholders, it can also be done as part of a move that increases the value of the stock (offsetting dilution, if you will), or the conversion of above mentioned debt, which is also good for the company overall.
Exit - How a company plans to cash out for themselves and their investors. Of course, not exiting can also be your strategy, but either way, it's important that investors know what the long term plan is when it comes to getting their returns. This can be, to name a few, an IPO, an acquisition, or staying in for the long haul (cash cow) and dividing the profits.
First Mover Advantage - The advantage that comes with being the first to innovate or enter an emerging market. Obviously, this can be a major advantage. But if the conditions aren't right, it can be a disadvantage - and depressing if you have to watch johnny-come-lately's capitalize on what you started when the market is more ready.
General Partner - A person active in and who is liable for the company. This can be founders, but also top investors and/or their firms.
Holding Period - The length of time an investment is held. It can be used to evaluate losses, gains and performance.
Intellectual Property - IP is crucial to competitive advantage and can come in the form of copyrights, trademarks, patents, and trade secrets. A company that doesn't have anything to protect, or one that fails to protect it may be something to be wary of.
JOBS Act - This was a 2012 bill (Jumpstart Our Business Startups) that changed investment rules substantially, paving the way for equity crowdfunding and small investors by allowing for advertising of investments and, in 2015, the participation of non-accredited investors.
Kickstarter - And J brings us right to Kickstarter, one of the main names in crowdfunding. A Kickstarter campaign can mean one of two things: the company has a progressive pluralist approach or they can't get a major investor. Often, it's the second, but Kickstarter does provide a place to raise funds and garner attention.
Low Hanging Fruit - An opportunity that is easy to monetize on. This is especially useful early on and can help a company bootstrap while still working on bigger innovations and developments. Low hanging fruit can be a product, customers or leads.
MVP - Minimum Viable Product - Also an important early benchmark for success. Setting what is the core of the product needed for proof of concept (read below) and beta testing correctly will create the most efficient trajectory for a startup. From an investment perspective, a company that does this successfully shows good business and technological sense.
No - As in "no, that's a bad idea and no more time and/or money should be spent on it."
Opportunity - Seize that sh*t.
Proof of Concept - Self-explanatory, but a benchmark that proves feasibility is crucial. Planned correctly with the above mentioned MVP, it's an important concept in and of itself that lets investors know that you are on your game.
Quitter - Nobody likes these guys.
Runway - In order not to be a quitter it's important to know "runway": How long your cash will last. Frame your goals responsibly and try to reach important marks, like proof of concept, so you can seek responsible investment or start generating revenue before this happens.
SEC - The United States Securities Exchange Commission. It's important to register intended sales and sales of securities done across state lines with the SEC. It's meant to ensure that business is done truthfully and transparently to not only protect investors, but build and keep trust in the market. Most importantly, don't run afoul of these guys, they do have an enforcement division.
Term Sheet - A non-binding document detailing the important details of an investment agreement, including percentage of ownership and voting rights. This is a sign that the deal is getting serious and it will serve as the framework for the final contract.
U - Poor U. It's just filled with sad words like "underperform", "undervalued" and "underwater". Just avoid U when on the job.
Valuation - A responsible (ideally) estimate of a companies current worth. In funding there is a pre-money and post-money valuation to indicate current worth and value added by investment, respectively. When these projections are off, windows can get broken and lawsuits can ensue.
Waiting Period - This is a part of, for example, the IPO process and refers to the period of time between filing a registration statement with the SEC and it being declared effective. Also known as a cooling-off period.
Xerophyte - A plant adapted to surviving with little water (think cactus). Don't knock its inclusion on this list, being adaptable and resourceful is a pretty big survival tool in life and business.
Year-Over-Year - A common way of comparing performance. Year can be compared against year in whole at year-end or as a distance between two points, such as comparing mid-year performance for the last 5 years.
Zombies - Companies continuing to operate even though they are insolvent. Whatever the reason, high operating costs or poor planning, zombies rarely rejoin the living.