Seed Money

Seed money refers to the very initial round of funding for a start-up to get of the round. Typically, the fund is provided by the founder-entrepreneurs, their families and friends, although it may also come from angel investors.

The amount of seed money raised is usually small ($10,000–$20,000, although it may be as large as $100,000) and is just enough to pay for the initial operations of the business, such as research and development, producing the prototype, as well as putting together a business plan.

When the operations are established, the founders would then approach venture capital firms for further rounds of funding. The sourcing for seed money is usually quite straight forward, compared with the lengthy due diligence required by venture capital firms before they decide to invest in a start-up.

Seed Money