Start-up terminology

Sometimes written in the USA as a single word, ‘startup’. A new company founded and run by researchers with the support of the University. The purpose of a start-up is to create and grow a self-sustaining business based on the founders’ research ideas, developed at the University.

A new company founded by the University to commercialise its intellectual property, and at least partly owned and controlled by the University.

The small group of people who drive the formation of a start-up and create its vision and business plan. There are usually two to six founders.

A clear, simple and ambitious statement of the way a start-up will change the world. It's developed and articulated by its founders and leaders. The founders’ vision encourages the commitment from the start-up’s stakeholders that’s needed to make major impact. Stakeholders are the University, customers, end users, partners, employees and investors.

The start-up’s plan to achieve its vision. It includes:

A statement of how the start-up’s product or service solves a problem for its customer, by:

People hired by the start-up’s founders, or other employees. They are hired to create and execute the start-up’s strategy to achieve its vision. Employees usually have less involvement than the founders in the creation of the vision.

A significant change in the start-up’s strategy. For example, a change in:

Pivots often happen as the start-up develops and learns more about its target customers. But its vision, once it’s established, is less likely to change.

Ownership of an agreed percentage of the shares of a start-up company, in exchange for a contribution to the start-up. This can take the form of:

A start-up’s equity-holders or shareholders could include:

Significant equity-holders often also have membership of the start-up’s board of directors, and therefore have a say in the company’s strategy.

This is where the founders fund a start-up’s activities using revenue and sometimes the founders’ savings. There is no outside investment or debt. The founders keep control of the company, but this limits the rate of growth of the business.

Wealthy individuals who seek out founders of early-stage start-ups, looking for opportunities to invest their own money. They are often successful entrepreneurs. Their investment can be from tens to hundreds of thousands of dollars, and often their time and experience.

This is raised from institutional investors such as superannuation funds and invested by the VC fund in a range of start-ups over seven to ten years in exchange for equity in the start-ups. VC investments in each start-up are usually millions of dollars, and in some cases tens of millions.

Large, established companies that invest in start-ups as a way to explore high-risk technologies or markets that overlap with, or are adjacent to, their own. If the start-up is successful, the strategic investor is likely to be interested in buying it.

The eventual sale of a start-up, through acquisition by another company or initial public offering. This means the floating of some or all of the shares of the start-up on a public stock exchange. An exit gives shareholders the opportunity to sell their shares. If an exit is successful, the return to investors could be ten or more times their original investment.

Pioneered in Silicon Valley, it aims to reduce the cost and risk of failure of new ventures like start-ups. It does this through an iterative development process involving prospective customers.