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Seed capital is the comparatively small initial investment made to a startup. The name itself suggests that it is the most initial funding, the seed for the company’s growth journey.
Generally, seed capital is provided by the founders, friends, family members, or angel investors who put capital in the start-up in return for some equity interest.
Seed capital gives a start to the business, to carry out the initial tasks.
Like you can spend the seed capital on market research, initial product designing, website building, prototyping, etc.
Q: What is the difference between seed capital and venture capital?
A: Seed capital is the initial small amount of investment that is needed to grow a business, like a seed.
Venture capital is related to larger business ventures.
Q: What is the purpose of seed capital?
A: To give a start to the business, to run the early stage operations. To let the business exist in the market and prepare for a growth journey.
Q: What are the sources of seed capital?
A: The assets of founders and financial support from friends, family members, and funding from angel investors or crowdfunding, etc.