What is Seed Funding for Start Ups

You got a good startup idea but no means to further it? Or are you worried about how you will increase your market value?

To cope up with it, Why not, Get yourself, Angel investors, through seed funding. What’s that?

Let’s Dig into it with What, Why and How?

What is seed funding?

To understand let’s take,

Seed = your baby startup

As time goes by your startup pick up the pace and grow into a big profitable plant, But to grow your plant you keep it for an appropriate photosynthesis process, Exactly, To grow your business you get required funds. 

Seed funding helps you accelerate your business by offering equity stake of your business in return of funds invested by investors. The investors invest in your business at an initial stage and your business start expanding 

Your business value grows in markets, your shares are at skyrocketing, and your investors are happy with a good return in the form of the increased value of their stake Now it relies on your investors to keep the share or sell it for profit.  Let’s take an example-

You offer one share for ₹1, 00,000 to the investor. The investor shows good interest and buys it. Now ₹1,00,000 = Your business seed money. This will help your company gain flight. As you expand, your audience increases your sales rises.

Improved sales are the value of the improved shares. The investor can now sell the share for a profit  "Higher" then the initial ₹1, 00,000. Some investors may choose not to sell. Instead, they choose to play an active role in the company. Your business, your investors both gain profit and Checkmate!

But there is more to opt-in it. What’s that? The answer is- 

 

The super pro's of seed funding for your startup 

• It powers your business to take high risks with investors support
• More networks lead to more growth
• Free from debts danger unlike sanctioned loans
• Flexible agreements than bank borrowings and venture capitals

All these Pro's can also switch to Con's

Why?

Due to the lack of Wise decision making and research to get your "star seed investors".  To find the perfect investor for your startup. To understand it more accurately one should know the rounds of seed funding - Series A, B and C.  

The Series A funding comes after the pre-seed funding when the basics such as user base, revenue figures are consistent along with key indicators. The investor is looking for a strong idea which can be turned into a money-making business. Thus, the funding is generated for a long period of time to mobilize the business further. The investor also acts as an anchor to gain more potential funds. It is increasingly common for companies to use equity crowdfunding in order to generate capital as part of a Series A funding round

On the other hand Series B funding is a next developing stage where the investor's confidence and the user base has been won. The investors are now the tool to expands the market reach to become and gain more profit for the company. The difference with Series B is the addition of a new wave of other venture capital firms that specialize in later-stage investing. 

The Series C funding is for the businesses which are already quite successful. The company can buy other ventures, make collaborations and own multiple subsidiaries. The company will end its external equity funding with Series C.

Thus, to understands your star investors it is very necessary to understand the potential and the rounds of funding to crack the best future financial outcomes. Each stage requires the maturity which your business accumulates. The right decision at the right moment enables you to find the correct star investor for your business growth. Series funding enables investors to support entrepreneurs with the proper funds to carry out their dreams, perhaps cashing out together down the line in an IPO.