Seed Capital Funding

Can you start a business with little or no money? According to some of the successful entrepreneurs, you can. In fact, creating wealth from nothing is not something new and is not rocket science.

However, what we are going to discuss in this article is about raising a start-up fund for your business, i.e. seed capital funding.

Seed Capital Funding

In general, there are some initial capital needed in order to start a business, and that initial capital to start the business is seed capital.

Seed capital often comes from the company founders’ personal assets or from friends and family, or angel investor capital.

The amount of money in seed capital funding is usually relatively small because the business is still in the idea or conceptual stage.

Seed capital funding is generally at a pre-revenue stage and in most cases the seed capital is needed for research & development, to cover initial operating expenses until a product or service can start generating revenue, and to attract the attention of angel investor capital or venture capitalists.

Seed Capital Funding

Why does business needs seed capital funding?

One of the main reason is due to banks and venture capital investors view seed capital as an “at risk” investment by the promoters of a new venture, which represents a meaningful and tangible commitment on their part to making the business a success.

Frequently, capital providers will want to wait until a business is a little more mature before making the larger investments that typify the early stage financing of venture capital funding.

So, seed capital funding is needed to get most businesses off the ground.

It is considered a high-risk investment, but one that can reap major rewards if the company becomes a growth enterprise.

This seed capital funding is often obtained in exchange for an equity stake in the enterprise, although with less formal contractual overhead than standard equity financing.

Most of the time, seed capital funding are money from entrepreneurs or business owners themselves, or friends and family that supporting the entrepreneurs or have good faith in their newly venture business.

Note: You may want to know further about creating wealth from nothing, or angel investor capital for your business.

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