d

1. Startup financing stages
Seed money
Seed money, sometimes known as seed funding or seed capital, is a form of securities offering in which
an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in
the company. The term seed suggests that this is a very early investment, meant to support the business until
it can generate cash of its own (see cash flow), or until it is ready for further investments. Seed money
options include friends and family funding, seed venture capital funds, angel funding, and crowdfunding.[1]
Usage
Early-stage funding
Government funding
Other sources
See also
References
Traditionally, companies that have yet to meet listing
requirements or qualify for bank loans, recognize VC
as providers of financial support and value added
services.[2] Seed money can be used to pay for
preliminary operations such as market research and
product development. Investors can be the founders
themselves, using savings and loans. They can be
family members and friends of the founders. Investors
can also be outside angel investors, venture capitalists,
accredited investors, equity crowdfunding investors,
revenue-based financing lenders, or government
programs.
Seed capital can be distinguished from venture capital in that venture capital investments tend to come from
institutional investors, involve significantly more money, are arm's length transactions, and involve much
greater complexity in the contracts and corporate structure accompanying the investment. Seed funding is
generally one of the first steps investors offer to get startups on their feet before they become fully
operational. [3] Seed funding involves a higher risk than normal venture capital funding since the investor
does not see any existing projects to evaluate for funding. Hence, the investments made are usually lower
(in the tens of thousands to the hundreds of thousands of dollars range) as against normal venture capital
investment (in the hundreds of thousands to the millions of dollars range), for similar levels of stake in the
Contents
Usage
Early-stage funding

2. company. Seed funding can be raised online using equity crowdfunding platforms such as SeedInvest,
Seedrs and Angels Den. Investors make their decision whether to fund a project based on the perceived
strength of the idea and the capabilities, skills and history of the founders.
This is the most selective type of funding. Government funds may be targeted toward youth, with the age
of the founder a determinant. Often, these programmes can be targeted towards adolescent self-employment
during the summer vacation. Depending on the political system, municipal government may be in charge of
small disbursements. The European Commission runs microfinance programmes (loans under €25 000) for
self-employed people and businesses with fewer than 10 employees.[4] European seed capital is available,
but typically is limited to a 50% share.[5] European SMEs can often benefit from the Eureka programme,
which federates SMEs and research organisations, such as universities. Government programmes are often
tied to political initiatives.[6]
Seed money may also come from product crowdfunding or from financial bootstrapping, rather than an
equity offering.[7] Bootstrapping in this context means making use of the cash flow of an existing
enterprise, such as in the case of Chitika and Cidewalk.[8]
Angel investor
Crowdsourcing
Private equity
Revenue-based financing
Series A round
Venture capital
1. "Crowdfunding and Civic Society in Europe: A Profitable Partnership?" (https://www.academ
ia.edu/3415172/Crowdfunding_and_Civic_Society_in_Europe_A_Profitable_Partnership).
Open Citizenship Journal. Retrieved April 29, 2013.
2. Narayansamy, Cheedradevi. "VENTURE CAPITAL PRE-INVESTMENT DECISION
MAKING PROCESS: AN EXPLORATORY STUDY IN MALAYSIA" (https://poseidon01.ssrn.
com/delivery.php?ID=6931021151220931160130061240990101240250330100450570180
881111270641041211060651200140240270571110070300030850740830000001130160
110480880350481251270030181191231181190270690710640280830760710981221120
05114006096125028090102121007027082008115024098065116&EXT=pdf). GLOBAL
JOURNAL OF BUSINESS RESEARCH. GLOBAL JOURNAL OF BUSINESS RESEARCH.
Retrieved 20 Feb 2018.
3. Kronenberger, Craig (2021-03-02). "Startup Studio Basics: 19 Startup Studio Terms You
Should Know Today" (https://medium.com/startup-studio-insider/startup-studio-terms-4cb0c0
850ea2). Medium. Retrieved 2021-08-30.
4. "EU-backed small business loans - European Commission" (http://ec.europa.eu/contracts_g
rants/microfinance_en.htm). Retrieved 20 March 2015.
Government funding
Other sources
See also
References

3. 5. "Quick guide to direct funding" (https://web.archive.org/web/20150402135639/http://ec.europ
a.eu/enterprise/policies/finance/guide-to-funding/direct-funding/index_en.htm). Archived
from the original (http://ec.europa.eu/enterprise/policies/finance/guide-to-funding/direct-fundi
ng/index_en.htm) on 2 April 2015. Retrieved 20 March 2015.
6. Greentrustwind.co.uk website (http://www.greentrustwind.co.uk/Home.html) Archived (https://
web.archive.org/web/20131006023648/http://www.greentrustwind.co.uk/Home.html) 2013-
10-06 at the Wayback Machine
7. Grant, Rebecca. "Crowdfunding vs. seed funding: All money is not created equal" (https://ve
nturebeat.com/2013/06/24/crowdfunding-vs-seed-funding-all-money-is-not-created-equal/).
VentureBeat.
8. Micucci, Emily. "Chitika to spin off mobile segment" (http://www.wbjournal.com/article/20150
319/METROWEST01/150319921). www.wbjournal.com. Retrieved 19 March 2015.
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