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Startup Terms

8 Feb 2025

Inventory Write Off

An Inventory Write-Off occurs when a company removes inventory from its financial records because it is no longer usable or has lost its value. This can happen due to damage, theft, obsolescence, or spoilage.

Supply Chain

The Supply Chain is the entire process of producing, transporting, storing, and delivering a product from raw materials to the final customer.

239

5 Feb 2025

Pre-Money Valuation

Pre-Money Valuation is the estimated value of a company before receiving external investment or funding. It helps investors determine how much a company is worth before their money is added.
Formula: Pre-Money Valuation=Post-Money Valuation−Investment Amount

Post-Money Valuation

Post-Money Valuation is the company’s valuation after receiving investment. It includes the new capital injected into the business. Formula: Post-Money Valuation=Pre-Money Valuation+Investment Amount

159

2 Feb 2025

Gross Margin

Gross Margin is the percentage of revenue that remains after deducting the Cost of Goods Sold (COGS). It measures a company's profitability before accounting for other expenses like marketing, rent, and salaries.

Working Capital

Working Capital is the difference between a company's current assets (cash, accounts receivable, inventory) and current liabilities (accounts payable, short-term debts). It reflects a company's short-term financial health and ability to cover day-to-day expenses.

89

30 Jan 2025

SOPs

Standard Operating Procedures (SOPs) are detailed, written instructions designed to guide employees in performing routine tasks to ensure consistency, quality, and compliance with industry regulations. SOPs help businesses maintain operational efficiency and minimize errors.

Seeding the Market

Seeding the market refers to the strategy of introducing a product to a target market by generating initial interest and creating demand before the full-scale launch. This often involves giving away samples, offering discounts, or using influencers to spread the word.

56

27 Jan 2025

Customer Churn Rate

Customer Churn Rate measures the percentage of customers who stop using a product or service within a given period. It is often used to gauge customer satisfaction and the effectiveness of customer retention strategies. If a subscription service has 1,000 customers at the beginning of the month and loses 50 customers by the end of the month. This means 5% of customers stopped using the service during that period.

COGS

Cost of Goods Sold refers to the direct costs associated with producing goods or services that a company sells during a specific period. This includes raw materials, labor, and manufacturing expenses, but excludes indirect costs like marketing and administrative expenses. A clothing store begins the month with $10,000 in inventory. During the month, it purchases $5,000 worth of clothes. By the end of the month, the inventory is valued at $6,000. The COGS for the month is:
COGS=10,000+5,000−6,000=9,000
This means the store’s direct costs for the goods sold during the month are $9,000.

78

7 Feb 2025

Digital Marketing

Digital Marketing refers to all marketing efforts that use the internet or digital channels to reach and engage customers. It includes both organic and paid strategies.

Performance Marketing

Performance Marketing is a data-driven approach where advertisers pay only when a specific action (like a click, lead, or sale) is completed. It focuses on measurable results and ROI.

78

4 Feb 2025

Adjusted EBITDA

Adjusted EBITDA is a modified version of EBITDA that excludes non-recurring, irregular, or one-time expenses to provide a clearer picture of a company’s core profitability. It helps investors and analysts understand the company’s true operating performance by removing factors that may distort financial results.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization measures a company’s profitability by focusing on its core operations, excluding financing, tax expenses, and non-cash costs like depreciation and amortization. It helps compare companies across industries by eliminating financial structure differences.

432

1 Feb 2025

Seeding the market

Seeding the market is a strategy where businesses introduce a product or service to a target audience in a way that generates initial interest, demand, and awareness before a full-scale launch. This is often done by offering free samples, partnering with influencers, or providing early access to selected customers.

Backward Integration

Backward Integration is a business strategy where a company expands its operations to control earlier stages of its supply chain, such as manufacturing raw materials or acquiring suppliers. This helps reduce costs, improve quality control, and enhance efficiency.

457

29 Jan 2025

Attribution Analysis

Attribution analysis is the process of identifying which marketing channels or touchpoints contributed to a sale or customer action. It helps businesses optimize their marketing spend by understanding what works best.

Law of Diminishing Returns

The Law of Diminishing Returns states that as more of a variable input (e.g., labor or capital) is added to a fixed number of other inputs (e.g., land or equipment), the resulting increase in output will eventually decrease after a certain point. In simple terms, each additional input contributes less to overall productivity beyond a certain level.

741

26 Jan 2025

Product-Market Fit

Product-Market Fit occurs when a product satisfies the needs of a specific target market so well that customers buy it enthusiastically, use it consistently, and recommend it to others. It indicates that there is strong demand and alignment between the product and its intended market.

Unit Economics

Unit Economics refers to the profitability of a single unit of a product or service. It evaluates revenue and costs associated with producing and selling one unit. Positive unit economics mean each unit contributes to overall profitability. A company sells a smartphone case for $20. It costs $12 to produce (including materials, labor, and shipping). $8 is profit per unit.

786

6 Feb 2025

IPO

An IPO (Initial Public Offering) is when a private company sells its shares to the public for the first time, becoming a publicly traded company. This allows the company to raise capital from investors and get listed on a stock exchange.

Incubation Capital

Incubation Capital is the early-stage funding provided to startups, usually by incubators, to help them develop their business model, prototype, or product before they raise larger investments. It is typically given in exchange for equity or future funding rights.

543

3 Feb 2025

ROCE

Return on Capital Employed is a financial ratio that measures how efficiently a company generates profits from its total capital (both equity and debt). It helps assess a company’s profitability and efficiency in using its capital.

ESOPs

Employee Stock Ownership Plans are equity-based compensation plans that allow employees to own shares in the company. These plans align employee interests with company growth, incentivizing long-term commitment and performance.

480

31 Jan 2025

General Trade

General Trade refers to the traditional retail sector where products are sold through small, independent stores like mom-and-pop shops, kirana stores, and local markets. These retailers usually stock a variety of products from different manufacturers and often deal directly with wholesalers or distributors.

Modern Trade

Modern Trade refers to large-scale retail chains, supermarkets, hypermarkets, and online platforms where products are sold in a more organized and standardized manner. Modern trade usually involves bigger stores with a uniform shopping experience and a broader range of products from multiple suppliers, often with promotional activities, fixed pricing, and a focus on convenience.

23

28 Jan 2025

Organic Sales

Organic sales refer to revenue generated without direct paid marketing efforts. These sales come from word-of-mouth, brand reputation, SEO, and repeat customers. A clothing brand receives 1,000 website orders in a month, and 600 of those come from customers who found the website through Google search or social media recommendations without seeing ads. These 600 orders are organic sales.

Non-Organic Sales

Non-organic sales are driven by paid marketing efforts, such as ads, promotions, and influencer partnerships. The same clothing brand runs Facebook and Google ads, leading to 400 additional sales. These 400 orders are non-organic sales since they resulted from paid efforts.

159

25 Jan 2025

MOQ

Minimum Order Quantity (MOQ) is the smallest quantity of a product that a supplier or manufacturer is willing to sell to a buyer in a single order. It is a common business practice in manufacturing, wholesale, and e-commerce to ensure cost-efficiency in production and logistics. A garment manufacturer may set an MOQ of 500 pieces for a particular T-shirt. Buyers must order at least 500 units to proceed.

ROC

Return on Capital (ROC) is a financial ratio that measures the profitability of a company in relation to the total capital employed (equity + debt). It helps assess how efficiently a company uses its capital to generate profits.

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