How to Get a Startup Seed Fund for Your Business
Seed funding hit a massive $10 billion last year. So though you might think we are heading into more challenging economic times, the world’s financiers are still comfortable putting capital into exciting new businesses.
If you have a startup and need money, seed funding could be the best option for your business. Read on to find out what seed funding is and how you can successfully acquire a startup seed fund for your new business.
What Is Seed Funding?
Seed funding is one of the earliest rounds of outside financing for a new business venture (sometimes, there is a pre-seed round before that).
It sometimes happens once the startup has a formal business plan, and occasionally when the business has started operating but is still in its very early phase.
Why Do You Need Seed Funding?
Not all startups need seed investment. You can bootstrap some businesses, keeping initial costs minimal until you make money. But that’s not always the case.
For example, if you want to launch a new app, you’ll need to spend hundreds of thousands developing and launching that app before making a single sale.
So seed money is there to get you off the ground and fund your development phase until your business is in a position where it can generate revenue.
Who Provides Seed Funding?
There are different financial sources for this stage of your business. That includes:
Venture capital: A private financial group that will provide the funds and some strategic and managerial input.
Angel investor: A wealthy, private individual who offers capital and consultancy.
Crowdfunding: An online model to allow you to seek funding from small private individual investors.
Family: You can also turn to family or friends for financial support at this business stage.
It’s worth considering the pros and cons of each of these financial sources. What’s right for one business might not be the best option for you.
How to Successfully Acquire Seed Funding
Investors want to see that your new business idea is viable. So the best chance you have to secure funding is with a sound, well-researched business plan.
You’ll need realistic financial forecasts in your plan, and investors will want to see a healthy return for their exit strategy. Make sure you have the right tools to put together your financial records – learn more here about how to do that.
You’ll also need to offer investors information on the experience and talents of your team.
For many top investors, a good quality team is more critical than an innovative product or an untapped market.
If you have weaknesses in your team, hire someone who can cover those talents and skills you currently don’t possess. That could make a big difference when seeking investors.
Is a Startup Seed Fund Your Next Step?
You have an exciting startup idea and lots of ambition – but to get that startup seed fund, you’ll need to tick a few more boxes. Start with your business plan, and ensure you have something extra special to put in front of investors.
If you need help with your business plan, head to the latest articles in our business section for some tips.
