Question 1

What is seed funding?

Accepted Answer

Seed funding refers to the initial sums of money a business venture raises, the seed funding represents the initial equity funding stage. The early investment that seed funding provides to a business is normally used to facilitate business growth and stimulate income generation.

For new businesses, seed funding, also known as seed capital, is an essential component of business investment.

Question 2

What is seed funding used for?

Accepted Answer

Seed funding is essentially equity-based funding, which requires investors to invest money into the business at the very early stages.

In return for the investment, the investor is given an equity stake.  An equity stake is a share of the business.

The seed funding arrangement is mutually beneficial for both business and investor.  The business receives essential capital to begin trading, and the investor acquires some ownership of the business.

Question 3

How much seed funding does my startup need?

Accepted Answer

Ideally, you should be able to raise enough money to reach profitability. Not only will this make it easier to obtain funding in the future, but you'll also be able to operate without additional financing if conditions get tough.

Alternatively, you may be looking to raise enough cash to get to the next milestone of your product’s development before looking to raise the next round of funding.

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