On Seed Funding..

Seed funding is a type of round of venture capital funding that provides early-stage funding for startups. It's typically given to startups with less than $1 million in revenue. Usually, seed funds are given to startups by angel investors or other accredited investors, who have had previous success in the field. It is the first round of investment that a company raises from private investors. It can be used to fund product development and marketing, as well as for hiring additional staff.

Seed round funding is typically aimed at companies that have just launched their product or service and have no customers.? Seed funding is a central part of the early stage venture capital (VC) fundraising process. It is a relatively small amount of money that provides the seed investor with an opportunity to test the viability of your idea but does not give them full ownership of the business.

Types of seed funding

Seed funding comes in many forms and may be provided by friends and family, angel investors, venture capitalists, accelerators, incubators or crowdfunding.

Friends and Family: Friends and family are the most common source of seed funding for new companies. They usually provide the startup with a small amount of money, often in exchange for equity or other benefits. This can be a good way to get started, but it's not always the best option. It's important to remember that you're asking friends and family members to put their own money at risk by investing in your venture — they may be unable to afford to do so if things don't work out as expected. Friends and family are also not likely to have enough experience with financial issues or legal issues related to the startup's operations. In addition, there's no guarantee that they'll be able to help you find investors who will give you more money than they invested in your company.

Angel Investors: Angel investors play an important role in growing a startup as they can provide a significant amount of financial support and guidance. An angel investor is often an individual who has made a fortune through successful investments and therefore has the time, resources and expertise to invest in new companies. They will often invest their own money in exchange for a stake in your company, although some angels may also be looking for returns from the company once it has been successful such as dividends. Angel investors usually invest less than $1 million dollars in a company. However, sometimes individuals can invest more if they believe that the company is a good fit for their investment portfolio. Angel Investors

Venture Capital: Venture capital is the type of seed funding that requires investors to put up money in exchange for share ownership in the company. The term 'venture' refers to the fact that venture capitalists are typically looking to invest in companies that will grow quickly and have big impacts on society.

Venture capital firms typically have a portfolio of companies, and they seek out high-potential startups with the potential to become industry leaders. They have access to significant amounts of capital and access to more sophisticated financial services than most angel investors. In exchange for investing money in startups, venture capitalists take a stake in a company — typically about 20% or 30% — which gives them a seat on its board or allows them to nominate board members themselves. They may also be able to negotiate different types of compensation packages with companies depending on how well they perform over time (for example, if there's an acquisition or sale).

Crowdfunding: Crowdfunding is an alternative method for sourcing seed capital from individuals who want to invest in startups but don't know much about investing or business development. Crowdfunding platforms allow people from all over the world to invest in startups they believe in through online platforms like Kickstarter or Indiegogo, which then pay out investors' money once projects reach certain milestones or goals have been met (typically within 90 days).

Incubators and Accelerators: These are two very similar types of seed funding which aim to provide startups with access to resources such as mentorship and assistance in finding investors. There are many incubators around the world including Silicon Valley based accelerators such as Y Combinator, TechStars and Betahaus.?

Accelerators usually provide a space for startups to work on their product or service while they are still at an early stage so that they can get feedback from other people in the industry. This is often referred to as the ‘incubator’ phase where startups receive funding, advice and guidance on how they can improve themselves before they move onto the next phase of their growth process which is often called the ‘growth’ or ‘scale up’ phase

When do startups raise funds?

It's been a common question for startups, but it's one with no simple answer. Some are raising as soon as they can, while others need more time and experience. A good rule of thumb is to ask yourself these questions:

1. Problem Validation

This is the most popular reason for raising money. founders want to make sure their idea is worth pursuing before taking out loans or taking on investors. It's also a good reason for early-stage companies that are still trying to figure out what they want to do. If you're not sure whether your idea is worth pursuing, it's better to wait until you've validated the idea. If your company is going to succeed, it will show up in the data. But if it doesn't work out and you end up with no product or service, then there was never anything worth doing in the first place.

2. MVP

When you’re ready to raise money, you need to make sure your product or service is ready for customer feedback. You should have a minimum viable product (MVP) that’s good enough to test with customers. Even if you plan on raising money for a minimum viable product, you still want it to be as simple as possible. That way, when you start selling the product, it will be easy for people to buy it and use it.

In order for your startup to be successful, customers need to be able to see how much value they get from using your product or service. This means that when someone buys your product or service, they should be able to immediately see how much better their life is because of it. If someone doesn’t notice any benefit after buying something from you, then they probably won’t use it again and will more likely refer to someone else who might buy more stuff from you in the future. You have to build something people will pay for before you can tell them how much they'll pay for it. That means building out your product or service before asking investors for more cash.

3. Readiness to Scale

The best time to raise money is when you are ready to scale the business. Raising money too early can be a bad idea because it will force you to make changes that you don't want to make. For example, if you have just launched your product and are getting traction, but not enough to justify a full-time employee, raising money now will mean hiring someone full-time who isn't able to do much more than answer customer support emails and help with marketing. If that person gets sick or has a family emergency at home, it's going to affect your ability to scale up quickly.

4. Traction

To answer this question, you need to determine if your company is profitable and cash-flow positive. If not, it will take time and money to grow. However, if you are profitable and cash-flow positive, then raising money might be the right thing for your business.

Startups don't need to raise money immediately. The goal is to build a strong business with enough revenue to support growth without raising equity rounds. A good way to determine whether or not you are ready for an equity round is by evaluating the financials of your business and asking yourself if you would be able to pay yourself from the profits from that year's sales assuming no outside investors. If the answer is yes, then you're ready. If not, then it might be time to raise some money from investors so that you can expand your operations and hire more people towards your vision for growth.

Stages of Fundraising

Seed funding is typically for around 12 - 18 months. This is the time it takes for you to develop your product and build a team of people that can support you in growing your business. A typical seed round has 3 main stages:

1. Development stage: You will spend this time developing the product and building out your team of specialists.

2. Exploration stage: During this stage, you will be testing out your idea with customers/clients and finding out what works and what doesn't work with your product/service.

3. Acquisition stage: Once you have a good understanding of what works and what doesn't work in terms of sales, you can start seeking acquisition partners who will help take your product/service to scale.

How to Raise Seed

1. Start with your network

The best way to get started is by asking for advice from people you already know. Start with your family, friends and colleagues. Even if they aren't in the industry you're planning on entering, they can still help you by providing valuable feedback about your idea and any possible competitors.

2. Create a Financial Plan

Before approaching investors, make sure you have a solid financial plan that shows how much money you'll need to raise and how much time it will take to build the product or service that you're hoping to fund. You want to be ready before approaching investors so they can see that there's potential in your idea and that they can trust the team behind it.

3. Research Potential Investors

You can use a service like Angellist or Crunchbase to find investors interested in your industry. Next, research potential investors for your seed funding round by going through Angellist or Crunchbase again if necessary. You should then set up meetings with the people who are interested in investing in your business so that they can ask questions about its operations and financials. Hence, they know what they are getting into before they invest their money.?

In conclusion, Seed raising can seem overwhelming, especially for the entrepreneur who may not have run a company before. It's imperative to take time and make educated decisions about whom you are pitching to, your financial plan, and the expectations of investors.

In the end, some investors just need to see that passion for your idea and a team of people who have dedicated their time and energy to follow through on that dream. That passion is usually enough for seed-level funding. Just go outside and spread the word about your project or product. With a bit of luck, it will help you raise your seed round.