What is Seed Funding and Why Do You Need It?

This post is by Jaclyn Robinson from Blog – Crunchbase

Every business starts with an entrepreneur and a great idea. But in order to bloom, they need money to grow. Not only do successful startups need capital to build a solid foundation, they must also have funds to cover everything from hiring staff to marketing. So how can businesses start building this well of cash?  

Seed funding is capital that comes from any source. Unlike loans, seed funding for startups generally doesn’t need to be returned. Here’s everything you need to know about seed money, types of seed fundraising, and how to go about raising a seed round.

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What is seed funding?

There are several misconceptions regarding raising money. So what is seed funding and how does it differ from other funding options?

Businesses that seek out this type of capital have already proven a market need for their product. They simply need the money to get that product to market and obtain a foothold in their industry.

One of the biggest distinguishers of seed funding is that seed investors are not providing loans. They expect a share in the future of the business. Entrepreneurs embarking on fundraising must be comfortable giving away part of their business.

Unless entrepreneurs already have savings, they need to look into a seed round, or their startups won’t stand a chance.


What is the difference between seed funding and pre-seed funding?

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