Explainer Guide to Seed Funding
Most startups are initiated with innovative ideas. Much planning goes into bringing unique ideas to life, but sometimes, the startups are unable to achieve their respective goals. This happens when there are not adequate funds available. In such situations, seed funding can come in handy and lead a failed business idea to the heights of glory.
What is Seed Funding?
In simple words, seed funding is the amount of money that goes into lifting a startup from off the ground. It turns dreams into expectations and business ideas into reality. Seed funding can come from any source, and once a business gets its initial funding, it has the opportunity to prove its potential. It can come up with new concepts, introduce a new product into the market, and pursue the latest industry trends.
Is Seed Funding a Loan?
It might seem that seed funding is a loan, but it is not. Businesses that take seed funding allow a share of profits or ownership to the investors in exchange for their capital investment. In this way, both parties greatly benefit from the business. Once the company sets off the ground, it can generate revenue and return considerable profits to the investors.
Does Every Startup Need Seed Funding?
Not necessarily. Not every startup requires a vast amount of seed funding. However, it takes much time to invest money into a small business and then wait for it to grow. Seed funding can provide an instant boost to business endeavors. From covering infrastructure costs, investment in marketing and development to providing for the initial costs of hiring, seed funding is considered the fuel for any business.
Types of Seed Funding Available for Startups
There are multiple sources from where potential investors can pool in seed funding. Getting a gist of all options is vital to understanding seed funding entirely.
There are more than 500 platforms of crowdfunding available nowadays. Whether people will invest in your small-scale business or not depends on the idea of your business and how interested investors are in it. If your business idea is appealing to the investors and promises excellent revenue in the future, people are likely to crowdfund for your business startup.
Corporate Seed Funding:
Corporate seed funding is a better investment idea than crowdfunding. In this type of funding, industry giants who have already made their names in the corporate sector agree to fund your business startup. It is beneficial to the business in a way that it does not have to spend on building brand visibility. Corporates usually invest in businesses like this when they see potential, talent, and huge profits in the future.
Investors who provide small seed funding, office spaces, or management services are incubators. They often extend support beyond the initial stages and do not take any equity from the startups. Individual investors can provide Incubators and can also be backed by the state.
There is much more to Seed Funding and multiple options to start a business. Are you confused about the kind of funding your business requires? Do not worry. At Think10 Capital, our business experts are available to guide you throughout your journey. What are you then waiting for? Consult us right away.