New entrepreneurs often encounter a very specialized business ecosystem that can be difficult to understand at first glance. In this context, mastery of a specific vocabulary in entrepreneurship, investment, and innovation becomes increasingly necessary. For this reason, South Summit, the main meeting point for the entrepreneurial and innovative ecosystem, has developed an Innovation Dictionary with the 23 essential words that first-time entrepreneurs must know to successfully take their first steps in the ecosystem:
A for Advisor: this is a professional with experience in a specific sector or industry who provides advice and professional vision to a startup or entrepreneur in this field, as well as high-value connections with entrepreneurs and investors.
B for Bootstrapping: through this process, a startup is created and grown without external investments or capital, only with the startup’s founders’ own resources.
C for Venture Capital: it is a type of investment that is usually used by funds specialized in high-risk, high-return investments. They are typically focused on early-stage startups that have the potential to grow quickly and ensure a return on investment.
D for Deal Flow: the literal translation of this term refers to the “flow of operations,» or what is the same, to all those projects, startups, and investment opportunities that reach different funds and investors through different channels. such as contacts, meetings, presentations…
E for Elevator Pitch: it is a speech or presentation lasting 30 seconds to 2 minutes (the length of a ride in an elevator, hence its name), in which the spokesperson for a startup must give the keys to the project to capture the attention of potential investors, partners, or clients.
F for FFF (Family, Friends, and Fools): this is a type of initial financing that comes from family, friends, and acquaintances of the founders of the startup. This financing, based on trust and proximity to investment sources, represents 19% of the financing of new entrepreneurs in Spain, according to South Summit’s 2023 Entrepreneurship Map.
G for Growth Hacking: a startup applies a ‘Growth Hacking’ process when it uses creative and innovative techniques and strategies, generally focused on the use of technology and marketing, to accelerate its growth, attract a large number of users or clients, and increase its income with minimal spending.
H for Hub: a «Hub» is a space that brings together entrepreneurs, startups, investors, and mentors to foster collaboration, knowledge exchange, and business growth, while also offering work spaces, access to financing, advice, and opportunities to do things. networking.
I for IPO (Initial Public Offering): an IPO (Initial Public Offering, or Initial Public Offering in Spanish) is the process through which a private company offers for the first time the sale of its shares to the public in the stock market, allowing it to raise funds from a broad investor base and providing the opportunity for growth and expansion.
J for J-curve: is a graphical representation that shows the temporal evolution of a startup’s net capital flow over time. The beginning of the graph will be marked by a decrease due to the first expenses and investments, although over time growth will be observed as the startup matures and begins to generate profits.
K for KPI: using this acronym (Key Performance Indicator), the performance of a startup is measured in relation to its objectives, which is why it is essential to evaluate the trajectory of a startup and be able to make important decisions. To define the KPIs of a startup, financial, human talent, or customer acquisition criteria or objectives can be used, for example.
L for Lead Investor: this is the main investor who leads a financing round in a startup by providing a greater amount of capital. This also generates an image of credibility and validation for the invested startup, which will almost always attract the interest of smaller investors. This figure also usually takes part in the strategic decisions of the project or adopts a mentor role for the founders.
M for Mentoring: through this process, the mentor advises and guides an entrepreneur or group of entrepreneurs through their professional experiences or with practical advice to help the growth of their startup.
N for Networking: thanks to the networking sessions held at many events and meetings, entrepreneurs can maintain conversations with investors, entrepreneurs, or other startup founders to initiate and maintain mutually beneficial professional relationships and build a network of contacts. Networking, in this sense, is really useful to achieve real opportunities for collaboration, advice, financing…
O for Outsourcing: this process consists of outsourcing certain activities of a startup’s business to specialized third parties. This is a common process among startups because they are made up of small teams, and this allows their professionals to focus on the strategic activities of their business while operations such as customer service, graphic design, or accounting are delegated. to experts in those matters.
P for Pivot: A startup pivots when it makes a significant change to its strategy or business model to adapt to new market circumstances or take advantage of a new opportunity. It is about changing the normal course of a startup to increase its probability of success and long-term growth.
R for Investment Round: it is a process through which a company, generally a startup, obtains financing for its project thanks to the participation of a series of investors. There are different types of investment rounds, such as the seed round, in which the capital to found the startup usually comes from friends and family, or others focused on recruiting employees, obtaining liquidity to develop new products or services, etc. There are fundamentally two types: series A, which is the first round of investment for a startup with which the money raised is used to finance its first stages, and series B, which is used to finance its growth.
S for Scale-up: is a company that has passed the initial startup stage and has demonstrated significant and sustainable growth in terms of revenue, customers, employees, and reach (it must have grown at an annual rate of more than 20% in the number of employees or in billing during the previous three years, according to the OECD). Unlike a startup, a scale-up is in the process of expanding its business quickly and efficiently.
T for TTM (Time to Market): this word refers to the time that passes from the conception of an idea to its launch on the market. It is a very useful indicator to measure the efficiency and agility of a startup, since having a low TTM is essential to gaining a competitive advantage, responding to market demands, and adapting to changes.
U for Unicorn: a unicorn is a startup that has reached a valuation of at least one billion dollars without having gone public. It is one of the main objectives of any entrepreneur when creating a startup, since becoming a unicorn is a guarantee that the project has grown rapidly and has disruptive potential in its sector. Some examples of Spanish unicorns are Cabify, Factorial, or Jobandtalent.
V for Valuation: This is the financial valuation of a startup at a given time. It can be taken from different factors such as growth potential, product traction, current and projected revenue, as well as the competitive environment and market conditions.
Y for Yak Shaving: is a common expression in the startup ecosystem that is used when someone does some seemingly irrelevant or secondary tasks, which end up leading to a succession of other tasks that end up taking the entrepreneur away from his goal. The expression was coined by software engineer Carlin Vieri, who used the anecdote of shaving a yak to explain how mundane tasks can lead to a series of tasks that must be resolved before addressing the main problem.
Z for Zombie Startup: is a startup that, although still operating, lacks significant growth or long-term viability. They are usually stuck in a permanent development phase without achieving their commercial or market objectives and are maintained by external financing or minimal income but lack the necessary strength and drive to expand.