Series A, Scalability, VC … The world of startups and entrepreneurship is full of terms that can sometimes seem to be absurd. But it is important to know them to fully understand the challenges of the technological sector. Here are the ones that you absolutely have to master.
A startup
This may seem obvious, but a startup corresponds to an innovative young company, often in the development phase, which seeks to grow quickly by exploring an economic model allowing it to go to the scale. It is distinguished by its transforming approach, the intensive use of technology and a strong adaptability.
Offering a new product, service or economic model, the startup often uses outdoor investors to finance themselves, in particular through fundraising.
Fundraising
The fundraising, also nicknamed a tour of the table, defines a process by which the startup requests investors to obtain capital, all in exchange for participation in its capital. This allows it to finance its growth, the development of its product or its expansion on the market.
There are different types of fundraising. The pre-seed, or pre-built, makes it possible to finance the first stages of the project. Seed will help the young push to develop a first viable product.
Then comes the fundraising in series A, the objective of which is to accelerate the growth of the company, by expanding its team as well as its economic model. The B series intervenes to subsidize a large -scale expansion, such as launch in new regions, customer acquisition, etc.
The C and more series then arrive. They support the internationalization or acquisition of other companies. In some cases, they precede an IPO.
Scalability
Scalability, term from English ” scalabibility “Referred to the capacity of a company, a product or an economic model to grow quickly without proportionally increasing its costs. For example, SaaS platforms like Slack can be defined as well, because once developed, they can be sold to a large number of users with significant additional cost.
The term Scale-Up designates the accelerated growth phase of a startup which becomes a more mature business.
Investment funds
It is a financial entity that collects money from investors to inject it into various assets, including companies. Its objective is to generate a return on invested capital.
There are several types. The venture capital, or VC in English, finances the startups with high potential but at high risk. This is particularly the case with Sequoia Capital, one of the most popular in Silicon Valley.
The Development Capital Fund supports already profitable companies but needed capital to accelerate their growth.
A Business Angel
This term designates an individual investor which finances startups or companies in the start -up phase, in exchange for participation in capital. These are often experienced entrepreneurs or executives with expertise in a specific field. In France, Anthony Bourbon is, for example, a very active business angel.
Valuation
In the world of startups, valuation represents the estimate of the total financial value of a company. It reflects its potential for future growth, its development prospects, the value of its technologies, its addressable market but also the quality of its management team.
The valuation varies according to the sectors and stages of development of the startup, ranging from a few hundred thousand to several billion euros. Today, the most valued startup in the world is SpaceX. It is followed by Tiktok’s parent company, Bytedance, then by Openai.
A unicorn
To put it simply, a unicorn designates an unlisted startup on the stock market valued at more than a billion dollars. However, it must meet several criteria to benefit from this title, such as rapid growth and major processing potential for a sector.
Why the word ” unicorn »? Because it underlines the rare and exceptional character of such a society in the ecosystem of startups.
Bootstrapping
Bootstrapping is rather rare in the world of startups. He refers to a development method in which the founder finances his project mainly with his own resources, without calling on external investors such as venture capital.
It presents its advantages, but also its disadvantages. Startups using bootstrapping have total control over their company, and can set up organic and disciplined development without external pressures. On the other hand, their growth prospects are potentially slower, because financial resources are more limited. Personal risk is, moreover, higher.
Crowdfunding
Crowdfunding, or crowdfunding in French, is a fundraising model where a project or a company requests a large number of people to obtain financial contributions, generally via online platforms. In exchange, contributors receive a gift or a product. The risk exists there too, especially if the set objective is not achieved.
An incubator
This term corresponds to an support structure which helps entrepreneurs to develop their project, by offering a set of strategic services and resources. In France, the most famous is undoubtedly the F station in Paris.
