Seed funding is a very early investment that aims to assist a business in growing and generating its own capital. Investors frequently receive equity stakes in exchange for the capital invested, which is also known as seed money or seed capital. The investors can be the founders of their own company, using their savings as seed capital.
Types of seed fundings for startups (to name a few)
1. Crowdfunding
Crowdfunding is a method of raising funds from a large number of people. Large groups of people pool small individual investments to provide the capital required to get a business or project off the ground. Individuals, charities, or businesses can launch campaigns for specific causes, to which anyone can contribute.
2. Incubators
A startup incubator is a collaborative programme that helps new businesses succeed. Incubators assist entrepreneurs in overcoming some of the challenges that come with running a startup by providing workspace, seed funding, mentoring, and training. A startup incubator’s sole purpose is to assist entrepreneurs in growing their businesses.
3. Accelerators
Startup accelerators provide education, mentorship, and funding to early-stage, growth-oriented businesses. Startups participate in accelerators for a set period of time as part of a cohort of companies. The accelerator experience is a process of intense, rapid, and immersive education designed to accelerate the life cycle of young innovative companies by compressing years of learning-by-doing into just a few months.
Seed funding is typically provided by family, friends, and other angel investors who are interested in working with startup companies. Venture capitalists focus on up-and-coming businesses with products they believe will sell for early-stage financing. If you were previously turned down by financial institutions, they may be more interested now that you have actual collateral and a large stake in the success of the business.
