Seed Stage Capital Fund
- Seed stage capital (Seed stage funds or Seed Funding round or Seed financing) is considered as the setup stage where a person or a venture approaches an angel investor or an investor in a venture capital firm for funding for their idea/product. It doesn’t have to be a large amount of money.
- This funding generally covers only the costs of creating a proposal. During this stage, the person or venture has to convince the investor why the idea/product is worthwhile. The investor will investigate the technical and economic feasibility (feasibility study) of the idea.
- This money generally covers only the essentials a startup needs such as a business plan and initial operating expenses—rent, equipment, payroll, insurance, and/or research and development costs (R&D).
- The primary goal at this point is to attract more financing. This means catching the interest of venture capitalists and/or banks. Neither is inclined to invest large sums of money in a new idea that exists only on paper unless it comes from a successful serial entrepreneur.
Why is Seed Funding important?
Seed funding proves to be very useful for startups. Below mentioned are the advantages of seed funding.
- It reduces the risk to founder in a new venture
- It covers for funds insufficiency
- It acts as a source of working capital
- It expands a business relationship by bringing strategic partners
- It provides means to scale up and it accelerates growth
Types of Seed Funding
- Crowdfunding:In recent times, crowdfunding platforms have become a trendy destination for seed funding. These platforms are generally open, and anyone can back the idea, concept, or product.
- Corporate Seed Funding:This is a very good source of seed funding as startups gain more visibility because of the big corporate investors. Large companies like Google, Intel, and Apple support startups regularly with seed funding. Such investments can prove to be very useful for new firms to build their brand.
- Angel Investors:These are the investors who invest seed funds in a startup in return for equity ownership or convertible debt.
- Incubators:These investors, along with providing small seed funds, focus on helping the new ventures through training and often also provide office space. Many leading educational institutes, like IITs and IIMs, also provide such services. Generally, Incubators do not ask for equity holdings from startups.
- Accelerators:These investors mainly focus on helping the new firms in scaling-up rather than supporting them in early-stage innovation. They also provide help through various training, mentoring, and giving networking opportunities. Unlike most incubators, accelerators usually take equity.
- VC funding: Venture Capitalists are the high-end investors that invest in a new venture after looking into various parameters such as market conditions, founder vision, growth potential, etc.
Seed Funding Procedure
- The funding for a startup follows a typical chain of rounds. The distinct rounds of funding adhere to the valuations, maturity of operations, and growth prospects of the startup at different stages of its life.
- To raise seed funds, it is imperative to have a creative business idea that can be commercialized. Along with the idea, the pitch made in front of the investor is equally essential. The first step for any business looking for venture capital is to submit a business plan, a venture capital firm.
- If interested in the proposal, the firm or the investor must then perform due diligence, the firm seeking investment should be prepared with a well-documented business plan describing its target market segment, market potential, existing and potential competitors, and its financial projections for next few years.
- Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds.
- Funding rounds for startups are designed in such a way that an investor obtains partial ownership in the startup. Therefore, the investor not only benefits from the profits of the startup during the short-term but also the valuations of the startup over the long-term.
How Finlender helps you?
We’ve been there
Having worked with many Seed funding companies, we provide resources and solutions to support initiatives across the entire finance function. We provide objective and unbiased advice and funds for the clients’ utmost needs.
We’re problem solvers
We work shoulder-to-shoulder with Portfolio Company CFOs and their teams to deliver long-term, scalable solutions that improve business operations and maximize investment value. We assist the clients in raising funds or sell their equity to a financial or strategic investor. We are one of the best Seed Investors in India who deliver end to end solutions that take care of all ‘pre’ to ‘post’ sanction needs of clients.
We have a well-rounded perception of what’s at stake for investors and their operating partners. FinLender India brainstorm with management, manage multiple investors and coordinate with service providers for Due Diligence process. We are focused on helping our clients realize value from each transaction, and tailor our approach to their individual needs.
We’re a trusted partner
We value long-term client relationships and think of ourselves as a trusted advisor. We bring a client-first approach to each engagement and supply services that add value throughout the transaction and investment life cycle.
Investment solutions offered
FinLender India has the know-how to make and implement customized solutions for your corporate financing needs.