seed capital

noun
Updated on: 26 Jul 2017

Definition of seed capital

:money that is used for starting a new business, program, project, etc.
  • He provided seed capital for the campaign.

Word by Word Definitions

seed play
  1. : the grains or ripened ovules of plants used for sowing

  2. : the fertilized ripened ovule of a flowering plant containing an embryo and capable normally of germination to produce a new plant

  3. : a propagative animal structure:

  1. : to bear or shed seed

  2. : to sow seed : plant

  3. : to plant seeds in : sow

capital play
  1. : the uppermost member of a column or pilaster crowning the shaft and taking the weight of the entablature — see column illustration

  1. : of or conforming to the series A, B, C, etc. rather than a, b, c, etc.

  2. : punishable by death

  3. : involving execution

  1. : a stock of accumulated goods especially at a specified time and in contrast to income received during a specified period

  2. : accumulated goods devoted to the production of other goods

  3. : accumulated possessions calculated to bring in income


Financial Definition of SEED CAPITAL

seed capital

What It Is

Seed capital is the earliest stage of capital investment for a start-up venture.

How It Works

Startup financing involves several stages of capital formation:  seed capital, venture capital, mezzanine or bridge funding, and an initial public offering.  The seed capital stage is the earliest stage of capital investment in a startup company.  Seed capital is usually provided by the owners, family, friends, or angels (i.e. wealthy individuals who invest in companies on an individual basis).   Some venture capital investors may invest seed capital in a startup, but typically on a smaller basis than their usual investments.

Seed capital is provided during the earliest stage of the company's formation, during the period of time when the company is involved a variety of early operations such as market research, product development, or prototype production.  During this early stage of investment, the company typically does not have revenues, or at least revenues that lead the company to be breakeven.

Why It Matters

Seed stage capital is invested on the basis of the entrepreneur's track record, skills, and business capabilities and the product's perceived strengths. Seed capital stage investment is the most risky, but because of the early stage of investment, it can have very substantial rewards. However, many early stage companies issue shares to follow-on investors, such as venture capitalists, and dilute the ownership of seed stage investors.


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