seed capital


Definition of seed capital

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

Keep scrolling for more

More Definitions for seed capital

seed capital


Financial Definition of 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.

Source: Investing Answers

Comments on seed capital

What made you want to look up seed capital? Please tell us where you read or heard it (including the quote, if possible).


a haphazard or makeshift solution

Get Word of the Day daily email!

Test Your Vocabulary

Summer 2019 Words of the Day Quiz

  • a-bowl-of-peach-sorbet-with-cut-peaches-next-to-it
  • Which is a synonym of desideratum?
Spell It

Can you spell these 10 commonly misspelled words?

Syn City

Test Your Knowledge - and learn some interesting things along the way.

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!