Entrepreneurial Dictionary

Maybe it’s because I’m a language teacher, but I think that vocabulary is a bit part of a lot of stuff. So, this is where I’m recording what seems useful to me. Just because I record a word here, though, that doesn’t mean I fully understand it.

Angel investors: Investors who buy a share of companies very early in the company’s development. I think that, generally, angels seem to understand that there will be a wait until there is a return on the investment.

Bootstrapped: This describes a business that was started only with the founder’s capital (savings or debt) as opposed to selling shares to angel or VC investors.

Crowdfunding: The practice of going directly to the future customers of a product and describing the product to them and then asking them to fund it. (Think of gofundme.com or KickStarter. A product or business that uses this system for collecting revenue is crowdfunded.

Exit: I love this word, because it sounds so innocuous. The “exit” is an IPO or acquisition or other event in which the investor’s (and founder’s) investment is suddenly turned into cold, hard cash.

High touch: A product that requires a lot of effort for each sale — producing shoes, for examples, requires someone to make each pair of shoes — is said to be ‘high touch’ because each product has to be touched often. The opposit is obviously low touch.

Low touch: A product — like a SAAS product — that can be made once and sold thousands of times is said to be low touch because it doesn’t need to be touched (made, modified, updated) again for each sale. The opposite is high touch.

ROI: A Return On Investment. It’s the simple math of, if I put $1 into a business, how much do I get back? If I get $10 back, it’s a 10x ROI. It should be obvious that more is better.

Software As A Service (SAAS): Service in this case is as a contrast to a ‘product.’ A product is sold only once, a service has a subscription fee. A SAAS business develops software — most likely online — and sells access to it for a subscription fee, rather than as a one-off. It’s a model that lets businesses focus on a smaller number of existing customers than always finding new customers.

Venture capital (VC): Venture capital, VC or, in reference to people or organizations, VCs are people and organizations who give money in return for a share of the company and who generally have their eyes set on a large ROI in an exit.