Seed Capital: A Guide for Social Enterprises
Seed capital is the money that a company raises to cover initial operating expenses and fund growth. It can also be used as an investment vehicle for investors who are looking for high-risk, high-reward opportunities. Seed capital comes in many different forms, but one of the most common types includes debt financing from venture capitalists or angel investors.
Venture capitalists are a common source of seed capital. This is money that comes from investors who are looking for high-risk, high reward opportunities. Venture capitalists typically invest in companies that have the potential to disrupt an industry or create a new one entirely by introducing some kind of innovative technology with the hope of making huge returns down the road.
Another common source of seed capital is angel investors. Unlike venture capitalists, who typically invest in startup companies that are at least two years away from generating revenue, angel investors look to fund businesses that have already started earning money and could be the next big thing within their specific industry.
Seed capital is often perceived as risky because it comes with no guarantees of success for entrepreneurs who need it to get off the ground. However, there are ways you can make your business more attractive to potential seed financiers by creating a strong pitch deck (a PowerPoint presentation used when asking someone else for funding), conducting thorough market research beforehand and demonstrating an understanding of what makes your product or service unique compared to its competitors.
To conclude, seed capital is the money a company needs to get its business up and running. Venture capitalists and angel investors are two common sources of this type of financing, but it can also come in debt form from institutions or individuals who have extra cash on hand looking for high-risk opportunities with potentially huge returns.