A Business Encyclopedia

Seed Capital

Definition: The Seed Capital is the initial money required to start a new business. Simply, the initial funding required to start the operations of a new business is termed as a seed capital.

Generally, the initial capital comes from the company’s founder personal assets or from friends, family or angel investors (the wealthy individuals who provide capital with some personal interest in the company).

The amount of money is generally small because the business is still in its conceptual stage and the funds are required to finance the preliminary activities such as research and development, marketing research, etc. Thus, seed capital is required to cover the initial operating expenses until the product and services start generating the revenues on their own.

The seed capital is considered to be at high risk because the business is in its formation stage and has no track record. But however, the founder could earn substantial rewards because of the early stage of investment.

The investors who fund the seed capital, do so to have a stake in the company and once the company starts reaping the rewards it becomes the growth enterprise. Once it reaches a growth stage, several investors are likely to provide funds to finance the further operations of the business. Thus, the venture capital and angel investment are likely to get attracted after the startup shows feasibility.

Leave a Reply

Your email address will not be published. Required fields are marked *


Related pages

michael porter 5 forces modelces production function propertieshygiene and motivation theorymodigliani miller hypothesiswhat are organisational theoriesschumpeter entrepreneurschumpeter entrepreneur definitiondefinition aptitude testhrm activitiesorganizational development in hrmansoff growth modeljeremiah benthamhow to manage channel conflictlikert theory of leadershipfielders contingency theorythe law of diminishing marginal utility refers todescribe the laissez faire theoryinterest on provident fundfactoring definition in financepsychoanalytic theory examplelikert rating scalesaturated market meaningan explicit coststaggered boardethnocentrism meanwhy is frictional unemployment inevitablehrm process stepsmeaning of hampering in hindiprovident funds indiataylors scientific managementcauses of channel conflictsmarketing microenvironmenttuckmans stages of group developmentfixed variable cost definitionherzberg theory of motivationranking appraisal method5 forces model of porteroligopoly definition in economicsskimming price policy definitionmeaning of balloon paymentwhat is business process reengineering explain in detailpoison pills financerevenue deficit meaningasset utilization ratio formulastratified sampling with examplesoligopoly pricing strategiesblake and mouton's leadership griddifferent elasticities of demandkanban bin systemhow do you calculate capital employedscaling techniques in research methodologycompulsory convertible debenturesstepping stone definitionhenry fayol principle of managementwhat is the meaning of neft transactionsampling distribution of means definitiondefinition of sole proprietorship in economicsnet profit margin ratio definitiondefinition of subscribed capitalexamples of laissez-faire leadership stylecorporate jargonsvague means in hindimeaning of divestiturekisan vikasbehavioral market segmentation definitiongrand strategy in strategic managementweber's model of bureaucracyreinforcement theory motivationhow to calculate profitability indexwhat is the meaning of apprenticesmcclellandsbranded products definitionautocratic managersvirtue ethics workplace examplestrategic intent wikipediaexplain the theory of purchasing power parityansoff product-market growth matrixdefinition of laissez-faire leadershipdelegating meansformat of a cash budgetcredit rationing definition