seed capital

Capital required to fund a company in its earliest stages. Seed capital may be used to set up a limited company and conduct the research necessary to draw up a business plan and seek further financing. Seed capital may be sourced from venture capital firms, but more frequently comes from friends and family and angel investors. This is because providing seed capital is particularly risky and venture capital firms prefer to invest at a slightly later stage, when the company is established but has not yet started on its rapid growth phase.