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seed capital

Contributor(s): Ivy Wigmore

Seed capital is the funding required to get a new business started. This initial funding, which usually comes from the business owner(s) and perhaps friends and family, supports preliminary activities such as market research, product research and development (R&D) and business plan development.

Seed capital funding is considered high-risk because the business is not fully functional and has no track record. Investors who provide seed capital funding often do so for a stake in the company. Once a startup has demonstrated feasibility, it is more likely to attract venture capital or angel investment to provide the greater funds necessary to get the business up and running. 

 

This was last updated in June 2013

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