The A – Z startup terms you need to know: S – Z
Startups have their own magic and words, the Startup lingo, and entering this thriving startup ecosystem can be overwhelming, especially when there’s so many terms to wrap your head around. If you can gain an understanding of the “lingo”, you’ll find it easier to meet and network with other founders, and speak to potential investors or sponsors!
In this blog, we are covering the final letters of the alphabet, so read on for S – Z of startup terms you need to know.
SAAS (SOFTWARE AS A SERVICE):
Software as a service is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet.
A company that has already validated its product within the marketplace, and has proven that the business model is sustainable. Scale-ups have already found a scalable and repeatable business model and achieved significant traction. Their focus is to find exponential growth and market development.
A segment is a group of customers that share similar characteristics which are relevant to marketing. Segments can include things such as age, gender, interested, and spending habits.
TAM (TOTAL ADDRESSABLE MARKET):
Total addressable market is also called total available market, and is a term that is typically used to reference the revenue opportunity available for a product or service. This helps to prioritise business opportunities by serving as a quick metric of the underlying potential of a given opportunity:
- Top-down, using industry research and reports.
- Bottom-up, using data from early selling efforts.
- Value theory, using conjecture about buyer willingness to pay.
Traction is evidence that your product or service has started to gain momentum in the market. Investors are looking for evidence that customers are purchasing your product or service, and your financial projections are not just a dream.
A unicorn is a privately held startup company valued at over $1 billion. The term was coined in 2013 by venture capitalist, Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures. An example of an Australian unicorn is Canva.
The direct revenues and costs associated with a particular business model, that are specifically expressed on a per unit basis.(For example, for each customer, how much it costs to convert them versus how much they are worth to you.)
Valuation refers to how much your company is worth. There are several formulas that can determine the value of your company, and valuation happens at every round or stage of funding.
Venture capitalist refers to a professional individual who invests money in your business in exchange for an equity share of the company. They usually focus on proven or later-stage startups, and invest greater amounts of money than an angel investor.
If you’re interested in learning more about Startup Gippsland and how we can help you build and scale your business, be sure to take a look at our website.