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Odd origins of nine entrepreneurship words and phrases Entrepreneur, angel investor, elevator pitch. Often used in start-up circles, these terms have their roots in Hollywood, Broadway and 18th century France. Can you guess which one came from which place?
Entrepreneur
These days, it seems everyone wants to be an entrepreneur, but what exactly does that mean? Derived from the French word “entreprendre,” meaning “to undertake” or “to begin,” the term refers to someone who owns, manages and assumes the risks of a business or some other enterprise. French economist Richard Cantillon is often credited with defining the term in the early 18th century, using “entrepreneur” to refer to any individual who purchased various “means of production” in order to combine them into a larger product.
J.D. Harrison
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Capital Business
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Silicon Valley
The holy land for high-tech entrepreneurs, Silicon Valley stretches from the San Francisco Bay to San Jose and houses thousands of technology giants and innovative young start-ups. Hewlett Packard, Apple, Google, Intel and Facebook are among the juggernauts currently headquartered in the region. Entrepreneur Ralph Vaerst is credited with coining the phrase, which first appeared in print in the title of a series of articles penned by Electronic News writer Don Hoefler in 1971. The area has long been home to many companies that produce semiconductors, of which silicon is a critical component.
Michael Forster Rothbart
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FOR THE WASHINGTON POST
Angel investor
Angel investors are generally wealthy individuals (sometimes operating in teams, called angel groups) who invest in companies in their earliest stages of development, usually in exchange for ownership stake in the form of stock or convertible debt. The term has roots on Broadway, where it originally referred to investors who provided large amounts of early-stage, high-risk capital to finance theatrical productions. In 1978, University of New Hampshire Professor William Wetzel borrowed the phrase in his research on early-stage funding, and “angel investor” has since been used in reference to backers of all types of early-stage ventures.
KATHY WILLENS
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AP
Venture capital
An important source of capital for many start-ups, venture capital refers to high-risk investments in firms with perceived high-growth potential. In this type of private equity agreement, members of the fund hope to eventually see above average returns following the event of a sale or an initial public offering. American Research and Development Corporation and J.H. Whitney & Company, each launched in 1946, are generally considered the first two venture capital firms. The former was founded by George Doriot, who is widely considered the “father of venture capitalism.”
Marcio Jose Sanchez
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AP
Bootstrapping
In the context of starting a business, “bootstrapping” means launching a company using only personal finances and the revenues from the new company. This enables an entrepreneur to retain full control of the business, which cannot be said for those who take angel funding and venture capital. More generally, the term applies to the pursuit of a goal without outside assistance, and while its origin isn’t entirely clear, many point to a tall tale by German Writer Rudolph Raspe titled “The Surprising Adventures of Baron Munchausen.” However, in the original version of the story, the main character pulls himself out of a mudpit by his hair, not his bootstraps. Go figure.
Tracy A. Woodward
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THE WASHINGTON POST
Elevator pitch
Hurry, clock’s ticking! Elevator pitches are quick, concise spiels that explain the important details about a company and its value proposition for investors. Most elevator pitch competitions allow entrepreneurs one minute (sometimes 30 seconds, sometimes two minutes) to sell their ideas to venture capitalists or angel investors. The phrase actually has its roots in Hollywood, where script writers would try to catch unsuspecting movie producers in the elevators and pitch their latest projects as quickly as possible.
Bret Hartman
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FOR THE WASHINGTON POST
Burn rate
A start-up’s burn rate measures the amount of venture capital dollars spent each month to finance the business before it becomes self-sustainable. Should the burn rate start soaring higher than expected or higher than approved by investors, entrepreneurs generally resort to reducing staff or other expenditures. The term dates back to the dot-com explosion in the late ‘90s, when the process of going through many funding rounds prior to positive cash flow became increasingly common.
Aaron Favila
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AP
Disrupt
Ditching its generally negative connotation, “disruptive” in entrepreneurship circles is used to describe any innovation or technology that completely turns a market on its head, sometimes charting a new course for an entire industry or industries. Harvard Business School Professor Clayton M. Christensen applied the word in an article in 1995 and later expanded on its meaning and significance two years later in a book titled “The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail.”
Keith Bedford
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BLOOMBERG
Intrapreneur
An entrepreneur inside a massive corporation? The concept seems paradoxical, but “intrapreneurs” are simply employees of large companies who take innovative ideas and turn them into new products and solutions. In many cases, their salaries are tied to the success of their ideas. In 1978, entrepreneurial duo Gifford and Elizabeth Pinchot coined the term in an article about large companies that were adopting the emerging trend.
Katherine Frey
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THE WASHINGTON POST
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Section:/business/on-small-business
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