Startup Jargon: Talk Like a Northwest Indiana Entrepreneur

People sitting around a table at a conference

Regardless if you are a seasoned business owner or just starting to explore the idea of becoming an entrepreneur, you will need to familiarize yourself with the language of the startup world. Before you pitch your business idea, speak to investors, or seek any institutional funding, you need to know the basics of startup jargon.

1 Million Cups: Each Wednesday at 9:00 am CST, 1 Million Cups brings together Northwest Indiana’s entrepreneurs, innovators, start up founders, business leaders and innovators to intersect at the crossroads of doing, making, networking, and (of course) coffee. Follow 1 Million Cups Northwest Indiana on Facebook.

Accelerator: An accelerator is a location-based business development program that typically works with cohorts and has a specified program and/or time horizon for education and mentoring.

Angel Investors: Angels are high-net-worth individuals who provide capital to high growth potential startup and early-stage businesses, usually in exchange for equity or convertible debt. Angels generally invest their own money, often making investments in the range of $5,000 to $100,000. Super Angels are experienced investors with greater means than more typical angels. Super Angels invest their own capital or invest larger amounts cooperatively with other like-minded individuals. The Securities and Exchange Commission (SEC) has strict requirement outlining accredited investors.

Articles of Organization: A document required by the state or local government agencies when forming a limited liability company (LLC) outlining the basic details about your company.

Bankable Companies: These companies have the collateral, track record and/or cash flow to qualify for conventional bank small business financing. “Non-bankable” companies typically need access to alternative loans or bank guarantees.

Bootstrapping: Starting and growing a business with little or no money. Comes from the phrase “pulling up by your bootstraps” and implies working hard to fund a business without outside funding.

Brick and Mortar: A physical storefront. Also known as a Main Street business. Examples include hair salons, gyms and restaurants.

Business Plan: Your business plan is the foundation of your business. It guides you through each stage of starting and managing your business. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.

Coworking Spaces: Coworking is a style of work that involves a shared working environment. Many coworking spaces offer a variety of options, such as open space and individual offices, access to meeting rooms and shared services. Frequently usage is based on a membership fee or month-to-month rent.

Crowdfunding: The practice of funding a project or business by raising many small amounts of money from a large number of people, typically via the internet.

Debt (Loans): The amount of money borrowed by one party from another. Companies in the startup and growth stages frequently acquire debt (borrow money) to fuel their startup or growth costs. Debt must be repaid and does not provide any company ownership for the lender.

Economic Developer: Efforts to improve the economic, political and social well-being of a community, ultimately improving the living standards of a region’s citizens. Economic developers often focus on attracting, retaining and creating jobs.

Elevator Pitch: A persuasive sales pitch. This is your sixty second answer to the question “What do you do for a living?” This is the opportunity to leave a lasting, impactful impression of you and your business.

Employee Identification Number (EIN): A unique nine-digit number assigned by the Internal Revenue Service to businesses operating in the United States for the purposes of identification.

Entrepreneur: That’s you (or at least you’re thinking about becoming an entrepreneur). Not every entrepreneur is the same.

Entrepreneurial Ecosystem: An entrepreneurial ecosystem comprises the many and varied components in a community that connect together to create a supportive environment in which people can start and grow successful companies. Those components typically include events, training classes, funding mechanisms, mentoring and coaching, technology transfer groups, incubators and labs. An entrepreneurial ecosystem also includes connectivity among entrepreneurs, resource providers and investors, a culture that supports risk and innovation, a pipeline of talent and programs that celebrate entrepreneurs in the community.

Entrepreneur Support Organization (ESO): An organization that provides training, education, counseling or other assistance to entrepreneurs. These organizations are typically nonprofit, government or educational in nature. Around here, we call them Resource Partners, because they are willing and ready to partner for your success.

Equity: Stock or any other security representing ownership interest. When a company acquires equity funding, it is trading some ownership of the company for the capital.

Exit Strategy: A contingency plan for transitioning the ownership of a company to another company, investors or employee buyout. Bankruptcy is a type of exit strategy.

Fictitious Name: When starting a business, you can title the company by using a fictitious business name. Commonly known as a DBA or “doing business as.” Business owners use a fictitious name so they don’t have to use their name.

Gig Economy: A labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. Examples include delivery drivers, photographers or musicians.

Grant: Money given to a company that does not have to be repaid and does not require equity in the company to be given in exchange for the funding. Grants are found on the federal, state and local levels. This is one way of funding your business and, unfortunately, most grants are for nonprofit organizations, not small businesses.

Inclusive Entrepreneurship: Making entrepreneurship open and easily accessible to all people regardless of race, location or gender. Leveling the playing field creates stronger communities, new opportunities for innovation and job growth.

Incubator: An incubator is a business development program that usually involves work space, mentoring and business development resources. As opposed to an accelerator, there is usually no timeframe involved in working in an incubator and firms come in and out rather than function as a cohort.

Innovation-Led Entrepreneur: Also called tech or high-growth, these companies form around a new technology or breakthrough process that has the potential for a very large market. These businesses go through the same stages as other startups, but often at a faster pace. And they sometimes need assistance with proof-of-concept, pitching for equity investments and building leadership teams.

IPO: Also known as Initial Public Offering. The sale or distribution of a stock of a portfolio company to the public for the first time. IPOs are often an opportunity for the existing investors (often venture capitalists) to receive significant returns on their original investment.

Loans (Debt): The amount of money borrowed by one party from another. Companies in the startup and growth stages frequently acquire debt (borrow money) to fuel their startup or growth costs. Debt must be repaid and does not provide any company ownership for the lender.

Main Street Entrepreneur: Often focused on the owner’s passion, these “Main Street” businesses (retailers, restaurants, dry cleaners) have a physical storefront, have employees and need operations support. Main Street businesses are often concerned with increasing sales. Other challenges are cash flow, funding and operations.

Makerspace: Makerspaces are places in which people with shared interests, especially in computing or technology, can gather to work on projects while sharing ideas, equipment and knowledge.

Microenterprises: The technical term is microenterprise, but these firms dream big. Companies in this category require little capital to launch. Most are focused around the owner’s personal expertise— consulting, design, lawn care — and they don’t require a physical location. Online businesses also fall into this group.

Microloan: A very small, short-term loan at low interest, usually to a startup company or self-employed person.

NWI BizHub: Hey, that’s us! We provide entrepreneurs and small business owners free, easy access to the right resources in Northwest Indiana at the right time. No mater what stage you are at in your business journey, we are here for you. There is no cost for either the entrepreneurs or the nonprofit organizations that make up our resource network. This ensures you objective, unbiased information about the organizations that can best meet your needs. Request your free personalized list of local resources based on your business needs.

Pitch Deck: A pitch deck is a fancy way of saying PowerPoint presentation. This is a brief overview of your business plan that you share with potential investors, partners, co-founders and customers.

Pivot: A major shift in strategy or business plan, often driven by customer feedback.

Product Development: The creation of products with new or different characteristics that offer new or additional benefits to the customer. May involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.

Proof of Concept: Documented evidence that a potential product or service can be successful.

Registration, Licenses and Permits: Regardless where you start your business in Northwest Indiana, you’ll need to pay taxes, hire employees and register for licenses and permits. Learn more about registrations, licenses and permits in Indiana.

ROI: Return on Investment. This is the amount or benefit of an investment divided by the cost of the investment. ROI is usually a percentage or ratio.

Rollout: The introduction of a new product or service to the market. Refers to a significant product release, often accompanied by a strong marketing campaign to generate a large amount of consumer hype.

SCORE: Offers free, confidential business education and mentoring. More than 13,000  volunteer business mentors in chapters across the country; supported by the Small Business Administration.

Second-Stage Entrepreneurship: Businesses that have grown past the startup stage but have not yet grown to maturity. They have enough employees to exceed the comfortable control span of one owner and benefit from adding professional managers. A business typically enters second stage when it approaches $1 million in total receipts, and can be in any industry.

Seed Capital: Helps take a company from proof of concept to market, build a user base and begin scaling. Investment ranges from $250,000 to $1 million. This is the earliest round of funding for a business.

Service Provider: Any government agency, nonprofit or higher educational program with a specific service or broad-based program to help start or grow small businesses. Also called Resource Partners, Entrepreneurial Support Organizations (ESOs). We’ve compiled an entire database of service providers who offer free or nearly-free assistance to business owners in Northwest Indiana.

Small Business Administration (SBA): A U.S. government agency that provides loan guarantees to make financing available to small businesses. Also supports mentoring, counseling and training.

Small Business Development Center/Small Business and Technology Development Center: Offer free business consulting and low-cost training services. Sponsored in part by the Small Business Administration, contact the Northwest Indiana Small Business Development Center.

SWOT Analysis: A structured planning method that outlines the strengths, weaknesses, opportunities and threats of an organization. Performing this analysis shows where the organization is today and where it may be positioned in the future.

Valuation: In order to obtain additional funding to grow and expand your business, you need to know what your business is worth. This is different from the price of your business.

Venture Capital: Comprise “general partners” who invest funds provided by other “limited partner” investors. Examples of limited partners include pension funds, insurance companies, foundations and ultra high-net-worth individuals. Venture capitalists generally make larger investments than angels, usually from $1 million to $10 million.

Women’s Business Centers (WBC): A national network of nearly 100 educational centers that assist women in starting and growing small businesses. Sponsored in part by the Small Business Administration.