Seed capital

Seed refers to the earliest funding stage of a start-up. The term “seed” metaphorically represents the idea of planting the initial “seeds” that will eventually grow into a successful, thriving business.

Companies at the seed stage typically have a proof of concept and a product under development but are often still trying to develop their customer base. Consequently, this type of funding is usually aimed at helping the company develop its product or service, build a team and establish a foundation for future growth.

The amount of seed capital can vary widely, ranging from tens of thousands to a few million dollars. It often depends on the industry, the stage of the product, and the needs of the start-up.

In exchange for their investment, seed investors typically receive equity in the start-up. At this stage, investors can acquire a significant stake in the firm. However, they are also accepting a higher risk, as the business is still unproven.

Seed capital (also referred to as seed funding) is the first of three funding stages: seed stage, early stage and later stage. It's important to note that the boundaries between these stages can be fluid, and the classification of a company can vary depending on the investor's perspective. There isn't a strict standard for the size of funding rounds, the specific milestones a start-up must achieve, or even the exact timing of each stage.