Seed Capital is the source of life for many startups. Below we explain what Seed Capital is, how to get it and what you can do with it.
Definition Seed Capital
Seed Capital is the money with which a startup finances its first business activities. It is therefore the first money that is invested in a startup or young company.
Seed Capital is synonymous with Seed Money and Seed Funding.
How do you get Seed Capital?
There are several ways to get Seed Capital. Of course you can make an initial investment yourself. But mostly you get further with the help of believers, friends and family (BFFs) and angel investors.
Crowdfunding is also a popular way to get seed capital. The government also has funds for Seed Money.
We have previously written about the financing phases of a startup. You can also read more about the Seed Capital phase here.
When are you in the Seed Capital phase?
The Seed Capital phase is basically the start-up phase of a company. We speak of the Seed Capital phase in two cases:
- The company does not yet have a product or service and only an idea.
- The company has a prototype of the product or service, but no real sales yet.
If you are eligible for Seed Money, you are still in the Valley of Death.
What can you do with Seed Capital?
With Seed Capital you finance the first activities, such as drawing up a business plan, conducting market research or developing a prototype.
After you have received Seed Funding, you can start developing your startup. The step that follows Seed Capital is raising venture capital (or Venture Capital).
Tip: do you know what it means if a company has the unicorn state has?
Difference Between Seed Capital and Venture Capital
Seed Capital involves lower amounts than Venture Capital. On the other hand, the risk for Seed Money investors is higher than for Venture Capital investors. That is because the startup at Seed Capital is still in a very early phase. As a result, there is a greater chance that the company will not survive.
Venture Capital (or venture capital) is discussed at a later stage, when the company is just a little bigger. The company then already has a greater chance of success.
Summary Seed Capital
Seed Capital is the money you need to take the first steps with your startup. The early investors who give Seed Money are at high risk. Yet every young company needs this first money. Obtaining Seed Capital is the first stage of funding for startups.