With the advancement of technology, entrepreneurs worldwide now have a plethora of options to fund their startup businesses. Along with many other funding options such as angel investment, crowdfunding, and seed investment, it is also one of the most popular funding options available in the world. Many entrepreneurs are getting advantage of it to fund their startups.
Now you might be wondering what seed investment is all about. In this article, we will define everything related to seed investment in detail for our readers. You will find all the answers to your queries here so that you can get benefitted from them.
What Is Seed Investment?
The term seed suggests that it is a form of very early investment. It is to support new startups. Seed investment is considered the very first stage of funding a startup company. It is the money raised or invested in the company in the early stages of its development. There are many terms for the same purpose, such as seed money, seed capital, and seed funding. All of them serve the same meaning, as mentioned above.
Usually, the seed investment is made in return for equity-based financing. Investors invest in the company for the sake of equity in the later stages of businesses. So in short form, the money invested in the early stages of startup businesses is known as seed investment.
There is a common misconception about seed investment that many entrepreneurs think that this investment is only to cover the businesses' initial expenditures. Therefore they are hesitant to invest their own money in the companies. However, this notion is entirely wrong. You need to invest your own money as well to keep the business on board. Finances must be streamlined to keep things in order.
Purpose of Seed Investment
Now you have understood the meanings of seed investment, let’s move to the next question commonly asked by people, what is the purpose of seed investment?
The purpose of seed investment is crystal clear, finances. Every new entrepreneur needs capital to start his or her business. Lack of finances not only hinders the growth of your company, but it also de-motivates the employees who are not paid on time.
Seed investment is significant to start a business and keep it going. It is a viable option for new entrepreneurs who want to launch their products in the market.
Sources of Seed Investment
There are many options that can get you seed investment for your startup businesses. You must understand the origins of seed investment to choose the best option for your companies that suits your requirements.
Few standard seed investment options are angel investment, accredited investment, friends and family angle groups, and crow funding. We recommend that you do proper research by keeping all aspects in mind so that you can find the best-suited options. Remember, seed investment is not something you have to deal with only once; it is the life and blood of your business. So choose wisely.