Seed funding is a startup's first fundraising round. This type of financing often occurs at the very beginning of a company, when it's still in the idea or prototype phase. The purpose of seed funding is to provide the necessary funds to develop a minimum viable product (MVP), test the idea in the market, and prepare the company for the next step, such as a Series A funding round.
Seed funding is often obtained from individual investors (business angels), seed funds, or sometimes even from the founders' close connections. In exchange for their investment, these early supporters receive shares in the company. The amount of seed funding can vary, but it's generally modest compared to later funding rounds.
Imagine a startup developing a new project management platform for freelancers. The founders have a solid idea, but they need €200,000 to create a working prototype and start attracting users. They raise seed funding from a business angel in exchange for 15% of the company's shares. This funding allows them to develop the product and start testing it in the market.
Seed funding allows startups to get through the first critical stages of their development without having to generate immediate revenue. It's an essential step for many companies, as it allows them to prove their concept before raising larger amounts of funding. Without seed funding, it's often difficult for a startup to develop and attract investors.
If you want to raise seed funding to launch your project, contact us through the contact form on our website. We can help you structure your fundraising and maximize your chances of success.