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Uzone.id — The startup world has its own unique language, filled with terms that may seem confusing at first but are crucial to understand if you want to thrive in the industry.
Mastering the key terminology of a startup can help you communicate better, for startup enthusiasts, these terms will help you avoid common mistakes and for entrepreneurs, these terms will be helpful to pitch more effectively.
Here are four popular terms that dominate the startup world and why they’re important.
Minimum Viable Product (MVP)
One of the most frequently used terms in startup circles is Minimum Viable Product (MVP). According to Atlassian, this term refers to the simplest version of a product that you need to build to sell it to a market.
The goal of an MVP is to validate an idea with real users before spending too much time and money on full development. Using MVP, a team can collect the maximum amount of validated learning about customers with the least effort.
Companies also can make informed decisions based on user feedback and pivot quickly if needed. This method saves time, cuts costs, and improves the chances of creating a product that resonates with the market.
So with an MVP method, you’re building the first small step at a low risk to your wallet and business that you can test, refine, and grow step-by-step. You’ll start with small steps (but big impact) to uncover the market’s interest in your product.
Bootstrapping
Bootstrapping refers to a situation in which an entrepreneur starts a business without external funding, your company only relying on personal savings, early revenues, or reinvesting profits to grow the company.
This approach is common in the early days of a startup, especially when founders want to maintain full control and avoid diluting ownership by bringing in investors.
Based on Investopedia, an individual is said to bootstrap when they attempt to establish and build a company from personal finances or the operating revenues of the new company.
A study by Fundera shows that 77 percent of small businesses rely on personal savings to get started.
Bootstrapping helps startups learn to be creative and smart by managing their limited resources, like focusing on building a solid business from the start. It might slow down growth, but the plus point is founders have the freedom to control their own path without pressure from investors.
Unicorn
A unicorn is a term referring to a privately-owned startup that is valued at USD1 billion or more. This term represents the top startup companies. Once you reach the unicorn status, the importance of the company is much more than regular startups.
The term Unicorn was coined by Aileen Lee, founder of Cowboy Ventures, to highlight the rarity of such successful startups. Unicorns used to be super rare, but now they’re everywhere, mostly because of the huge boost in venture capital funding in the past few years.
According to CB Insights, there are currently over 1,200 unicorns globally, with companies like Stripe, SpaceX, and Bytedance topping the list. But don’t be fooled by the number—becoming a unicorn is still a huge achievement.
It’s important to remember that being a Unicorn is not the only path to success. Not every business needs to be a unicorn to be profitable or impactful. The term only highlights the growing influence of tech startups, as well as the ambition and innovation required to achieve such high valuations.
Beside Unicorn, there’s also another term that classified startups based on their business valuations, it’s Decacorn and Hectocorn. Decacorn is a term for a company valued at more than USD 10 Billion, while Hectocorn status is used for a company valued over USD 100 Billion.
