Entrepreneur Dictionary for Startups

The entrepreneur dictionary for startups contains terms and definitions commonly used by entrepreneurs, investors, accelerators, and others who interact with startup ventures and startup financing.
For more entrepreneur resources check out our  Acronyms for Startups, Infographics, or Startup FAQ.

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S Corporation -  A closely held business corporation which has the ability to make an election to pass corporate income, deductions and losses to shareholders for federal income tax purposes.  S Corporations may not have more than 100 shareholders, a shareholder who is not an individual, (special exemptions may apply) or more than one class of stock.  As a result, they are not generally viewed as good structures for entrepreneurs seeking to finance their companies with  funding from angels, angel groups or venture capital firms.6
- Synonyms: S Corp, Subchapter S
SaaS -  Software as a Service.
SAFE -  Simple Agreement for Future Equity
SBA -  Small Business Administration
SBIC -  Small Business Investment Company
SBIR -  Small Business Innovation Research Program
Scalability -  The ability of a startup or small business to leverage its' existing resources to grow and operate at a larger scale without being encumbered by factors such as capital investment, human resources and legacy structures, etc.6
Screening -  A process utilized by individual investors, angel groups and VC funds to determine their interest in investment opportunities.  The screening may be informal or formal in nature and typically includes an assessment of the opportunity against the investors previously determined criteria for investment.6
Search Engine Marketing -  An online type of marketing designed to drive traffic to a company or an organizations’ website to optimize its ranking, including but not limited to paying for the site to appear in search engine results.6
- Synonyms: SEM
Search Engine Optimization -  Processes and methods used to increase or boost site rankings or the frequency in which a websites search results are returned by an internet search engine as part of a process to maximize user traffic to the site.6
- Synonyms: SEO
SEC -  The United States Securities and Exchange Commission charged with regulating all sales of corporate securities.7
- Synonyms: Securities and Exchange Commission
Secondary Purchase -  Secondary Purchase is purchase of stock in a company from a shareholder rather than purchasing stock directly from the company.5
Secondary Sale -  The sale of private or restricted holdings in a portfolio company to other investors.3
Sector -  Segments of the economy in which business markets share similar operating characteristics, or similar products and services are known as sectors.  The three major classifications of sectors are the primary sector, which includes raw materials such as minerals and mined materials, and natural products such as agriculture and forestry products, the secondary sector which includes manufacturing, processing and construction and the tertiary sector which is comprised of companies which provide services.6
Securities -  Includes all types of equity and debt instruments and rights in and to them.3
Securities Act of 1933 -  The federal law covering new issues of securities. It provides for full disclosure of pertinent information relating to the new issue and also contains antifraud provisions.3
Securities Act of 1934 -  The federal law that established the Securities and Exchange Commission. The act outlaws misrepresentation, manipulation, and other abusive practices in the issuance of securities.  Securities and Exchange Commission: The SEC is an independent, nonpartisan, quasi-judicial regulatory agency that is responsible for administering the federal securities laws. These laws protect investors in securities markets and ensure that investors have access to all material information concerning publicly traded securities. Additionally, the  SEC regulates firms that trade securities, people who provide investment advice, and investment companies.3
Seed Capital -  Seed Capital is the money used to purchase equity-based interest in a new or existing company. This seed capital is usually quite small because the venture is still in the idea or conceptual stage.5
- Synonyms: Seed Money
Seed Fund -  A venture capital fund specializing in very-early-stage startups.7
Seed Money -  The initial round of capital for start-up companies, typically provided by angel investors through preferred stock or convertible bond type instruments.6
- Synonyms: Seed Capital
Seed Round -  The first investments made into a company by someone other than the founder.  The term comes from planting a seed for the first time.7
Seed Stage -  The stage of a scalable startup immediately following the concept stage. In this stage, the entrepreneurs typically validate their product or service to the marketplace, develop their MVP, commence initial market testing and development, and begin development of their business model / go to market strategy.   The first formal round of investment beyond friends and family typically occurs in this round with investment from super angels, angel groups and micro VCs.6
- Synonyms: Start-up Stage
Seed Stage Financing -  An initial state of a company’s growth characterized by a founding management team, business-plan development, prototype development, and beta testing.3
SEM -  Search Engine Marketing
Senior Securities -  Securities that have a preferential claim over common stock on a company’s earnings and in the case of liquidation. Generally, preferred stock and bonds are considered senior securities.3
SEO -  Search Engine Optimization
Serial Entrepreneur -  An entrepreneur who has previously founded and run one or more ventures.7
Series A -  A company’s first significant round of venture funding (though angels often participate in this round).2
Series A Crunch -  A putative problem that has, or may occur if more companies get early stage funding from angels and seed funds than are eventually able to obtain later stage funding from venture capital funds.7
Series A Preferred Stock - 
  • The first round of stock offered during the seed or early-stage round by a portfolio company to the venture investor or fund. This stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of preferred stock in a private company are called Series B, Series C, and so on.3
  • Series A Preferred Stock is the first round of stock offered during the seed or early stage round by a portfolio company to the venture capitalist. Series A preferred stock is convertible into common stock in certain cases such as an IPO or the sale of the company. Later rounds of preferred stock in a private company are called Series B, Series C and so on.5
Series B, C, D... -  Investment rounds from venture capital funds subsequent to the first Series A round.7
Series Seed -  Used generally to refer to the first equity round from serious seed or angel investors in a company, following its Friends & Family round but prior to a Series A.7
Servicemark -  An identifying word, phrase, design or symbol that permits third parties to distinguish and differentiate the sources of differing parties services. Servicemarks are registered with the appropriate governmental offices such as the United States Patent and Trademark Office, (USPTO).6
- Synonyms: SM
SHA -  Shareholders Agreement
Shareholders Agreement -  An agreement signed during a financing transaction by all of a company's shareholders in which they agree in advance to certain provisions.  These will typically include indicating which parties are entitled to designate members of the board of directors, and thus control the company.7
Shell Corporation -  A corporation with no assets and no business. Typically, shell corporations are designed for the purpose of going public and later acquiring existing businesses. Also known as Specified Purpose Acquisition Companies (SPACs).3
Sherpa -  In the startup world, an advisor who helps guide and support a new company.7
Signature Loan -  This type of loan is secured by the “signature” or promise to pay by the borrower. There may or may not be restrictions on its use. Also known as a “character loan” or “good-faith loan”. 6
Significant Participation Test - 

A test that is satisfied if the General Partner determines in its reasonable discretion that Persons that are “benefit plan investors” within the meaning of Section (f)(2) of the Final Regulation constitute or are expected to constitute at least 25 percent of the interests of the Limited Partners.  Note that the test is 25% of the interests of all the limited partners, which means 20% (+/-) in the partnership as a whole, taking into account the general partner’s interest.3
Silent Partner -  A silent partner is an investor who does not have any management responsibilities but provides capital and shares liability for any losses experienced by the entity. Silent partners are liable for in any losses up to the amount of their invested capital and participate in any tax and cash flow benefits.5
Simple Agreement for Future Equity -  A new form of funding for early stage companies developed by YCombinator to solve a number of issues with traditional convertible note financing.7
Simple Agreement for Future Equity - 

A new form of funding for early stage companies developed by YCombinator to solve a number of issues with traditional convertible note financing.7
SM -  Servicemark
SM -  Social Media
Small Business Administration (SBA) -  Provides loans to small-business investment companies (SBICs) that supply venture capital and financing to small businesses.3
- Synonyms: SBA
Small Business Innovation Development Act of 1982 -  The Small Business Innovation Research (SBIR) program is a set-aside program for domestic small-business concerns to engage in Research/Research and Development (R/R&D) that has the potential for commercialization. The SBIR program was established under the Small Business Innovation Development Act of 1982, reauthorized until September 30, 2000 by the Small Business Research and Development Enhancement Act, and reauthorized again until September 30, 2008 by the Small Business Reauthorization Act of 2000.3
Small Business Innovation Research Program -  See Small Business Innovation Development Act of 1982.3
- Synonyms: Small Business Innovation Research
Small Business Investment Companies -  (SBIC) Small Business Investment Companies or SBIC are lending and investment firms that are licensed and regulated by the Small Business Administration . The licensing enables them to borrow from the federal government to supplement the private funds of their investors. SBICs prefer investments between $100,000 to $250,000 and have much more generous underwriting guidelines than a venture capital firm.5
- Synonyms: SBIC
Small Business Technology Transfer program - 

The Small Business Technology Transfer program, from the US government; intended to assist educational institutions in transferring new technology to the private sector.7
SMB -  Small to Medium Business
SME -  Small and Medium Enterprises
SME -  Subject Matter Expert
SMM -  Social Media Marketing
Sniff Test -  A colloquial expression referring to a quick assessment of a situation to see whether it appears legitimate.7
Social Media -  The use of electronic online communities to share information, communicate ideas and personal messages and engage with others through comments, discussion and various media such as blog articles and video.  Examples of platforms on which social media communities exist include FaceBook, Instagram, LinkedIn, Pinterest, Quora and Twitter.6
Social Proof -  An investment approach leaning heavily on the identity of other, well-known people who are supporting the company.7
Social Venture -  A startup enterprise established to benefit society utilizing entrepreneurial methods. Social ventures may be either a "for-profit" or a "non-profit" entity.6
- Synonyms: Social Enterprise
Society for Corporate Compliance and Ethics -  (SCCE) A non-profit professional organization dedicated to fostering law-compliant and ethical corporate behavior.  See http://www.corporatecompliance.org for more information.1
- Synonyms: SCCE
Soft Landing -  A face-saving acquisition of an unsuccessful startup, usually for little or no compensation.7
Software as a Service - 

SaaS refers to Software as a Service, a cloud based software application where users are charged on a subscription basis.6
SOP -  Standard Operating Procedure
SPA -  Stock Purchase Agreement
SPAC -  Specified Purpose Acquisition Company
Spray and Pray -  Investing in an array of companies in the hopes that one of them will become a unicorn.6
Sprint -  In the tech and startup communities, a sprint is a process in which entire teams pitch in and work together to complete a defined objective in a short period of time.6
Staggered Board -  This is an anti-takeover measure in which the election of the directors is split in separate periods so that only a percentage (e.g., one-third) of the total number of directors come up for election in a given year. It is designed to make taking control of the board of directors more difficult.3
Startup -  A startup is a new business venture / enterprise in its initial or early stages of development. These stages include the concept, seed, early, growth and mezzanine stages.6
Statutory  Voting -  A method of voting for members of the Board of Directors of a corporation. Under this method, a shareholder receives one vote for each share and may cast those votes for each of the directorships. For example: An individual owning 100 shares of stock of a corporation that is electing six directors could cast 100 votes for each of the six candidates. This method tends to favor the larger shareholders.3
Stock Option Pool -  Shares of stock reserved for employees of a company. The option pool is a way of attracting talented employees to a startup company - if the employees help the company do well enough to go public, they will be compensated with stock. Employees who get into the startup early will usually receive a greater percentage of the option pool than employees who arrive later.2
Stock Options -  1) The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies. 2) A widely used form of employee incentive and compensation. The employee is given an option to purchase its shares at a certain price (at or below the market price at the time the option is granted) for a specified period of years.3
Strategic Investors -  Corporate or individual investors that add value to investments they make through industry and personal ties that can assist companies in raising additional capital as well as provide assistance in the marketing and sales process.3
STTR -  The Small Business Technology Transfer program.
Subordinated Debt -  A note or loan which can only be paid after other, more senior or higher ranking obligations can be paid, in the event of a liquidation. This type of obligation, also known as "junior debt" is riskier than unsubordinated, debt which has preferential claims on company assets.6
Subscription Agreement - 
  • The application submitted by an investor wishing to join a limited partnership. All prospective investors must be approved by the General Partner prior to admission as a partner.3
  • An application under which an investor applies to acquire a specific number of shares or units of a company at a specific price, at a later date, assuming the investor can be determined to be qualified under SEC guidelines and the company’s meeting certain conditions. The agreement establishes the terms and conditions under which the investor will be bound if accepted.6
Success Fee -  A percentage commission paid to an intermediary or other individual as an incentive on the closing of a large financing transaction.7
Sunsetting -  The process of phasing out a product, service or line of business is known as sunsetting.6
Super Angel -  A misnomer describing micro VCs.  True super angels are active angels who make many significant investments, find and negotiate investments, and can bring other investors along with them.7
Supermajority -  The percentage defining the level of shareholders that must approve significant company actions such as borrowing money, or acquiring or merging with another business; typically defined in the 60.0% to 66.67% range.6
Sweat Equity -  Sweat equity is the equity or ownership interest created in a startup by it's founders as a result of their contributions in the form of hard work, labor and toil.6
SWOT -  Strengths, Weaknesses, Opportunities and Threats Analysis
Syndicate -  Underwriters or broker/dealers who sell a security as a group.3
Syndication -  The process whereby a group of venture capitalists will each put in a portion of the amount of money needed to finance a small business.5
Synergy -  Synergy is the interaction and leveraging of resources provided by different individuals or organizations to obtain a combination greater than the sum of the individual parts.6

Notes: 

  1. Source: Crowdfunding Professional Association website
  2. Source: 37 Angels website
  3. Source: Angel Capital Association website
  4. Source: Go4Funding website
  5. Source: FundingPost website
  6. Source:  FundingSage, LLC
  7. Source:  Angel Investing,  by David S. Rose
  8. Source: Institutional Limited Partners Association website
  9. Source: Venture Choice website

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