What is seed funding and how does it work?
Seed funding, taken from the word "seed" is the capital needed to start / expand your business. As you can see from the picture below it often comes from the company founders' personal assets, from friends and family or other investors.
The amount of money is usually relatively small because the business is still in the idea or conceptual stage.
This type of funding is often obtained in exchange for an equity stake in the enterprise, although with less formal contractual overhead than standard equity financing.
Lenders often view seed capital as a risky investment by the promoters of a new venture, which represents a meaningful and tangible commitment on their part to making the business a success.
How does it work?
There are some musts need to be done if you want to successfully raise seed financing as follows:
1) Proof of Concept (need to prove that is a market for it + monetization methods)
2) Get your first customers
3) Obtain feedback
4) Change/ Improve
5) Bootstrap
6) Pitch to potential Lenders
Source:
https://www.quora.com/What-is-seed-funding-and-how-does-it-work
