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Silicon Valley is the tech industry and venture capitalism mecca in the United States. Over time, this ecosystem has created its own language for day-to-day business matters. For anyone unfamiliar with how tech startups function internally, we created this glossary of common tech industry terms, acronyms, and how venture capital funding works.
Make sure you are comfortable with these concepts before interviewing at a tech company!
An acquisition occurs when one company acquires (buys) another company. This gives the buyer power, though executives from the acquired company may still make decisions. Example: Facebook Inc. acquired Instagram for $1 billion in cash and stock.
Angel Investor or Angel
An angel investor is a wealthy individual who provides some amount of funds for a start-up. In return, these investors usually receive ownership equity or convertible debt. Angel investors have recently taken to forming themselves into groups or networks to pool resources. A great place to find out what angel investors are up to is the most popular social network, Angel.co.
“Appointments Set” is a term for the amount of planned meetings an employee has with qualified prospects. For example, “John had an awesome day on the phones, and now has 12 appointments set for the week.”
Average dollar per sale
In order to calculate average dollar per sale, take the total sales amount (in dollars) and divide it by the total number of sales. This is sometimes referred to as “average deal size.”
B2B selling refers to transactions between businesses. Generally these transactions are for big ticket items, but many SaaS companies are also selling mainly to other companies.
B2C occurs when a business is selling a product directly to their consumers. This happens frequently in retail scenarios.
“Base” is short for base salary. In commissioned jobs, the base salary is your income amount without commission.
Frequently discussed events or up-and-coming companies are considered buzzworthy. With social media, nearly anything can be buzzworthy, as long as it is garnering significant attention from the public.
Calls (sales calls)
You’ve probably received a few of these in your lifetime, but we promise that not all sales calls are unpleasant. The motive behind these calls is to reach out to potential new or returning customers.
A channel is the figurative pathway that companies use to serve their product to their target market. These include direct channels, wholesalers, manufacturers’ representatives, distributors, and value added resellers.
A close is an attempt to convince a prospect to make a decision to buy. This can be done multiple times throughout the sales process, but it doesn’t always end up in a finalized sell.
Closing ratio can be calculated by dividing the total number of sales in a given time period by the total number of demos or presentations. Example: Five sales this month divided by 10 total presentations equals a 50% closing ratio.
A cold call is a form of a sales call to a potential new customer. The drawback is that these potential customers are not anticipating a call, and the caller does not have any established relationship with them.
Consultative selling is a sales technique where the salesperson works as an adviser for a prospect. The salesperson asks questions to find out more about what the prospect requires, and then uses that information to match them with a product or service. The salesperson is usually intending to sell their own products, but they will oftentimes recommend other products if there isn’t a match. In the short-term, this can be seen as counterproductive, but the salesperson is doing this to create a trusting relationship with the prospect.
A deal-flow is the number of possible deals you have stored in your pipe-line.
A demo is the same as a “pitch” of your product, and can be done in-person or through the phone. The point of a demo is to describe and explain the features, advantages, and benefits of your product. Presentations can also be considered demos, but only when there is a discussion of price.
Direct Response Marketing (DRM)
DRM is a marketing technique that utilizes physical mail, email, and other personally targeted methods. The intent behind DRM is to get rid of cold-calling.
A draw is a kind of load taken from future commissions earned. To understand this further, it helps to think of it as a credit/debit system
In short, an incubator is when an outside team assists with an internal idea and helps to complete it. This external team is generally a form of management that works with an internal team to fully flesh out an idea and take it to completion. An incubator can also utilize an external team of developers.
Inside sales is a selling method in which salespeople reach customers by phone or online, as opposed to meeting in person.
Interface refers to the device through which a user can communicate with a computer or the Internet. Interface has advanced rapidly in recent years, creating a highly interactive Internet user experience.
IPO (Initial Public Offering or Initial Purchase Offer)
An IPO occurs when a company first decides to issue common stock to the public. Companies of all sizes and ages can do this, but smaller companies typically undertake an IPO. You can find out more about the intricacies of IPOs here.
Lead generation is the action of researching potential prospects in your area.
A lead is a prospect who could potentially harbor a need or desire for your product or service.
Objections are any concerns or questions that the prospect voices during a sales demo or presentation. Objections can prevent a salesperson from making a sale, so be sure to address them quickly and carefully.
Outside sales are the opposite of inside sales, being that these sales are held out in the field. Salespeople who prefer to meet face-to-face will utilize the outside sales method. This is a great way to maintain quality relationships with customers.
A salesperson’s pipeline is a list of prospects who are more than likely to purchase within a given period of time.
Similar to a demo, the purpose of a pitch is to sell your product by presenting its features, advantages, and benefits to a potential customer.
Researched information regarding your lead or prospect such as first and last name, best time to call, background information, possible needs, and most importantly, names in common that you can use to build rapport.
A prospect is a lead who is likely to be interested in a product or service being sold.
A qualified prospect has clearly expressed interest in a product or service and is financially able to afford it.
A quota is the minimum amount of sales or productivity that a salesperson must meet. Quotas are generally measured quarterly or monthly.
Remote employees do their work offsite, usually from home or while traveling.
SaaS (Software as a Service)
SaaS is a product that is accessed through the Internet. Data for SaaS products is hosted in places such as the cloud. An example of this would be Zenefits, an HR software service.
Trade-shows are events that leads and prospects attend in order to learn more about a certain industry or occupation. Vendors sponsor these events to gain attention and generate leads.
Transactional selling is a method in which a salesperson seeks out prospects in order to match them to a product or service. Once the sale is complete, the relationship between salesperson and customer is typically over.
Value-added reseller (VAR)
A value-added reseller is a company that takes an unfinished product and adds features. Once completed, the company will sell it.
This term refers to “vertical markets”. Vertical markets focus on specific industries or audiences. The companies within these markets work to meet one another’s needs.
A warm call occurs when a salesperson contacts a prospect who has some kind of relationship with the company already.
“Web 2.0” is the term for the second stage of the Internet. This second stage consists of the move from static web pages to dynamic, user-friendly websites. Web 2.0 is distinct due to the popularity of user-generated content. Social media is a classic example of Web 2.0.
“Big data” describes the ability of marketers and businesses to collect and analyze data about consumers. There is so much data being collected that it is changing our understanding of the world. This data is collected through seemingly innocent means. Simply put, users’ actions are consistently recorded and analyzed. This also allows products and services to be personalized and customized.
Venture Capital Funding
There are many ways to get funding for your business, one of which is venture capitalism. Venture capital funding is generally private equity capital given to companies that are just starting out, such as startups. The stages of venture capital funding are described below.
Some of the top VC firms include: Sequoia Capital, Union Square Ventures, Austin Ventures, Andreessen Horowitz, Accel, Benchmark Capital, Caufield & Byers, DAG Ventures, Index Ventures, Google Ventures, and the Omidyar Network.
The seed stage is when an entrepreneur or small business approaches an angel investor or a venture capital firm to gain funding for their idea or company. It is usually less than $1 million.
Series A/Start-up Stage
The Series A/Start-up Stage begins once the idea or proposal has been qualified. After this, a business plan is presented to the venture capital firm, and a team is created to helm the venture. Typically, this funding ranges from $2 million to $10 million. This funding is intended to assist the company for the time it needs to develop products, perform branding activities, and hire essential employees.
Series B/Second Stage
Series B/second stage funding is usually a higher amount, around $5 million. This amount is provided after the company has completed its product and has been selling it successfully. The intent behind this funding is to allow the company to gain a larger market share and adequately compete with others.
Series C,D, E/Third+ Stage
This stage is essentially an expansion of the Series B/Second Stage funding. It provides more funding, so as to continue increasing market share for the company in question.
This stage is the method through which most investors attempt to make their exit. At this point, most companies are successful enough to go public. Declaring an IPO will increase market share and attract further clients.
We hope this glossary serves you well in the future, and please reach out if you have any questions. Should you wish to reach out to a recruiter and find out more, click here!