Venture Investing Glossary

The world of entrepreneurship has been home to success stories of visionary and bold individuals with original ideas throughout history. Here are two inspiring examples of such stories: Thomas Alva Edison and Henry Ford. Edison founded the Edison General Electric Company after his impressive work in inventing the lightbulb. Ford, on the other hand, worked as an engineer at Edison's first venture, the Edison Illuminating Company, and then created his own start-up, which later transformed into the global automotive giant, Ford Motor Company. Today, the startup universe, filled with technological innovations, rapid changes, and growth, has become one of the most crucial elements shaping the future of the world.

Without even realizing it, T. Edison became a start-up owner, while H. Ford developed his own venture with the help of Edison's incubation services, and angel investors who saw potential in Ford's venture and invested in it. So far, there isn't any unfamiliar term in what has been written, right? So, what other terms, phrases, and word clusters are used in the rapidly growing and world-shaping startup universe?

This dictionary aims to explain start-up terminology for those curious about the entrepreneurial world. It includes frequently encountered terms and their meanings in the startup universe, from angel investors to MVPs, from incubation centers to exit strategies. May it guide those who wish to venture into this exciting and dynamic world by opening the doors of the entrepreneurial realm.

Accelerator

Accelerator, also known as an incubation center, is a program that provides early-stage entrepreneur candidates with essential living expenses, office space, and intensive mentoring.

Action Plan

A detailed plan outlining the tasks that entrepreneurs need to accomplish to reach a specific goal.

Angel Investment

Angel investment represents the initial funding or venture capital invested by "angel investors" in a start-up's early stages. It is typically in exchange for equity or profits rather than being a grant.

Angel Network

An organization that brings together a group of angel investors to pool resources and facilitate the funding process for start-ups through syndication.

Anti-Dilution

Anti-dilution is a measure taken to protect both investors and the venture in case of a decrease in the company's shares. It prevents the dilution of existing shares.

Benchmark

Benchmarking involves comparing and evaluating successful companies and executives with other businesses in the industry.

Breakeven Point

The point at which a company's revenue equals its expenses, and it starts making a profit. It is an important metric for investors and is expected to be included in the business plan.

Bootstrapping

Bootstrapping refers to entrepreneurs funding their business using their own savings or personal resources without external investors or venture capital.

Branding

The process of giving a product or company a personality and identity.

Burn Rate

Burn rate refers to the rate at which a start-up spends its venture capital before generating positive cash flow from operations.

Business Plan

A business plan is a roadmap for entrepreneurs that showcases the strengths of their venture and demonstrates their abilities to successfully implement the business. It includes an executive summary, problem-solving approach, product/service description, and exit strategy.

CAC (Customer Acquisition Cost)

The expenses incurred by a start-up to acquire a single customer.

Crowdfunding

Crowdfunding is the practice of raising a small amount of capital from a large number of people to finance a new business venture. It aims to bring investors and entrepreneurs together through platforms specifically designed for this purpose.

Demo Day

The day when start-ups that have completed an accelerator or other incubation programs present their businesses to potential investors in short pitches of 5 to 15 minutes.

Dilution

The decrease in a company's ownership percentage due to the issuance of additional shares.

Due Diligence

A comprehensive investigation of a company before making an investment.

Early Stage

A term used for promising start-ups or ventures that are in their early stages, even before they become fully established companies.

Elevator Pitch

A brief and persuasive pitch that entrepreneurs make to introduce their venture and convince the listener, often in the time it takes to ride an elevator.

Exit

The strategy of selling one's rights and shares in a company after it achieves the desired success.

Fintech

Fintech is the abbreviation of "financial technology," which refers to new technology aimed at improving and automating financial services and usage.

Funding

The process of providing the required funds and credit to a start-up or business to support its operations and development.

Gordon Method

A creative brainstorming meeting where teams come together to generate new ideas without knowing the specific objective.

Hedge Fund

A term rarely used in the startup world and translated as "serbest fon" (free fund) in Turkish. Hedge funds are flexible investment funds composed of high-net-worth investors that are capable of conducting unrestricted trading activities. Due to their legal structure, they are inclined to invest in start-ups.

Incubation

The term used for the incubation system designed to provide a range of services and support to entrepreneurs, particularly in the advanced technology sector. It aims to assist the establishment of early-stage companies.

Investment Round

The period that includes the investor tours conducted by entrepreneurs in situations where there is no exact information about the type of investment.

IPO (Initial Public Offering)

The process of a new company going public by offering its shares to the general public.

Late Stage

The stage in which start-ups that have progressed from the early stage have positive cash flow and are beyond the burn rate, creating sustainability. It can be translated as "geç aşama" in Turkish.

Lean Startup

A principle that emphasizes customer-centricity and focuses on developing products or services based on customer needs rather than the entrepreneur's desires.

Letter of Intent

A non-binding letter that outlines the terms and conditions agreed upon by potential investors and entrepreneurs. It serves as a guiding document during the contract phase.

Mid-Stage

The stage that comes after the early stage and refers to the phase where the start-up has clarified its business idea.

MVP (Minimum Viable Product)

The most basic version of a product that includes the minimum features necessary to gather customer feedback.

NDA (Non-Disclosure Agreement)

A contract in which one or more parties agree not to disclose confidential information shared during their collaboration.

Negotiation

The process of bargaining that takes place between two or more groups.

Pitch Deck

A visual and auditory presentation of the business idea, usually lasting between 5 to 10 minutes. Its primary purpose is to highlight the strengths of the business plan and persuade the audience that the entrepreneur possesses the skills needed to successfully bring the venture to life.

Private Equity Firm

Firms that provide financial resources, including venture capital and risk capital, to dynamic, creative, and innovative entrepreneurs whose financial capacity may not be sufficient. They may also offer management and operational support and receive equity in return.

Prototype

The first working model or version of a product or service.

Return on Investment

The difference between the gain realized by an investor when exiting a company and the amount of investment made during the start-up phase.

Risk Capital Market

Markets that provide financing in riskier financial conditions, including debt and funding.

Seed Fund

Seed fund refers to the investment capital directed towards early-stage start-ups.

Series A Funding

The investment required to realize the prototype, often referred to as the market entry stage. It is used to finance the commercial launch of a product or service.

Series B Funding

Funding provided to a company during its growth stage.

Startup

A newly established, rapidly growing, and high-risk venture.

Term Sheet:

A term sheet is a document prepared before investment negotiations with potential investors, outlining the basic terms and conditions related to the investment. It is non-binding and expresses the conditions under which the investment will take place and the intentions of the parties involved.

Unicorn:

The term "unicorn" is still used in Turkish and refers to start-ups that have achieved a valuation of over one billion dollars.

VC (Venture Capital):

Venture capital is a dynamic, creative, and innovative financial resource that allows entrepreneurs with insufficient financial capacity to develop their investment ideas. It provides support in managing and operating the business and involves transferring capital in exchange for shares.