A guide to basic jargon founders must know before pitching to sharks.

Shark Tank in India has taken television by storm. Nobody expected that an admired show like KBC, which is ingrained in Indian culture, could be given competition by a ‘foreign franchise’. Shark Tank means more to the population than KBC in some respects because of the opportunity it seemingly presents. Business owners and innovators all around the country are learning about private equity funding, perhaps for the first time.

For all those who just entered this world of private equity funding with dreams to grow their own business, this article will explore and help you understand start-up jargon, the knowledge of which plays a vital role in successfully pitching to potential investors, a.k.a sharks, whether on or off National Television.?Pay close attention to these terms the next time you watch an episode of Shark Tank or attend a real life pitch-day, so you understand their practical relevance.

• Gross margins: Revenue less direct expenses (do not confuse this with EBITDA). Shows the capital a company retains to pay necessary debts and other costs.?
• EBITDA: Earnings Before Interest, Taxes, Depreciation, Amortization (reduction in loan value). In simple terms, the underlying profitability of a company.?
• Cash Burn: The amount of money the business is spending in a given period of time. (i.e. week, month, or year).
• Unit Economics: the revenue and cost of producing/selling one unit of the product/service.
• GMV: Gross Merchandise Value, the total value of all merchandise sold in every stage of the product use cycle. (Different from revenue)?
• Due Diligence: A process undertaken by a third party on behalf of potential investors and companies, to make sure everything is in order. (finances, assets, debts, background, etc)?
• Exit strategy: A plan to scale the company, and of the older investors to get a return on their investment by selling to new investors. Ultimately, going public.
• Top Lines: The gross sale or revenue of a company.
• Leapfrogging: Moving forward rapidly to modern technology/developments without going through associated stages in linearity. Especially used for rapid growth of the business.
• Horizontal and Vertical markets: Vertical markets offer consumers goods and services which belong to a certain industry, profession or community. Horizontal markets offer products from a wide array of sectors.?
• Bottleneck: The pain point. The place where the business is getting constricted.
• Run rate: A metric that refers to current financial performance to predict future financial performance of the company.

These are some terms which I hear a lot and also find are most misinterpreted. I will share open resources I found online which have an extensive list of private equity-specific terms. I would strongly recommend going through this comprehensive list once in a while, as you never know when somebody may throw you off with jargon.

On the other hand, if you can sensibly incorporate this terminology into your presentations, it will definitely be a point in your corner. This understanding shows that you are educated about your business, and saves hassle while working together with investors.?

Good luck!??

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List of important terms in private equity:?

https://www.indiafilings.com/learn/must-know-startup-jargons-for-indian-entrepreneurs/?

https://ldc.co.uk/glossary/

https://tenzing.pe/learn-with-us/article/a-founder-friendly-glossary-of-pe-terms-and-concepts/?