The initial stages of a businesses can be the hardest, and it is crucial that you have enough capital to get off the ground and launch your business. As such, in this article we will be focusing on your seed money.
So, what exactly is seed money? Seed money is the funding you have in the initial’s stages of your business. It is normally reserved for the more key factors of the business, like market research, product testing and more.
Seed money is crucial for entrepreneurs as it is their primary way to grow their ideas into a business, so it is vital that it is spent properly on the right factors in a business rather than factors that aren’t as important, such as over-hiring or huge marketing campaigns. These uses of capital will do nothing to help the businesses in the long run.
Ways of acquiring seed money
Unlike most types of funding for business, seed money can come from a huge variety of places and the amount of seed money you start with can greatly depend on the source of the seed. Some ways you can acquire seed money is:
Crowdfunding – Entrepreneurs can seed money through crowdfunding platforms where individuals contribute a small amount of money in exchange for rewards or equity. However, it is not guaranteed as any campaigns can fail to meet its funding goal.
Angel investors – Angel investors will provide seed funding in exchange for equity in the company. However, investors may expect a say in the company’s decisions, and they could have conflicting opinions.
Personal savings – Many entrepreneurs have to use their own money to fund the initial stages of their business. This is risky as the idea of losing your hard-earned savings in a failed business can be emotionally taxing.
Downsides of seed money
While seed money is only the first step on your financing journey, it is also one of the most important sources of capital you can acquire as it will fund the start of your businesses. The downside is that in most cases, if the seed money provided is not enough or the businesses spends the money in the wrong areas, it can cause the entire business to go under.
To conclude, seed money comes from a variety of sources, so it is in your hands to decide which is right for you and your business, as the first steps you take in a business are the most important.