South Summit developed an Innovation Dictionary, with the 23 essential words that first-time entrepreneurs should know
Starting out is a path full of opportunities and challenges, especially for those who decide to embark on this adventure for the first time.
In Spain, 4 out of every 10 entrepreneurs are new, that is, they have only started on a single occasion, according to South Summit’s Entrepreneurship Map 2023, developed in collaboration with IE University.
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, he 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:
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.
Bootstrapping: through this process a startup is created and grown without external investments or capital, only with the startup’s founders’ own resources.
Venture Capital: It is a type of investment that is usually used by funds specialized in high-risk, high-return investments. They are normally focused on startups in their early stage that have the potential to grow quickly and ensure a return on investment.
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 the different funds and investors through different channels such as contacts. , meetings, presentations.
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 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.
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 profits. income with minimal spending.
Hub: A “Hub” is a space that brings together entrepreneurs, startups, investors and mentors to foster collaboration, knowledge exchange and business growth, also offering work spaces, access to financing, advice and networking opportunities.
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-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.
KPI: using this acronym (Key Performance Indicator) the performance of a startup is measured in relation to its objectives, which is why they are 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 in the invested startup, which will almost always attract the interest of smaller investors. This figure also usually takes part in strategic decisions of the project or adopts a mentor role for the founders.
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.
Networking: Thanks to the networking sessions held at many events and meetings, entrepreneurs can hold 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, and financing.
Outsourcing: this process consists of outsourcing certain activities of a startup’s business to specialized third parties. This is a fairly 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.
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.
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. Fundamentally, there are two types: series A, which are the first round of investment for a startup with which the money raised is used to finance its first stages, and series B, which are used to finance its growth.
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 (must have grown at an annual rate of more than 20% in number of employees or in billing during the three previous years, according to the OECD). Unlike a startup, a scale-up is in the phase of expanding its business quickly and efficiently.
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 gain competitive advantage, respond to market demands and adapt to changes.
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.
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 competitive environment and market conditions.
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.
Zombie Startup: This is a startup that, although still operating, lacks significant growth or long-term viability. Typically, they are 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.
