Types of Seed Funding
1. Crowdfunding: One of the well-known forms of seed funding these days is crowdfunding. A crowdfunding platform’s concept or notion is widely accepted by people all over the world. Currently, there are over 500 platforms available for crowdfunding. For instance, the crowdfunding efforts for the Oculus Rift, Pebble Wearables, and Exploride are well-known worldwide.
2. Seed Money from Corporations: Seed capital was the beginning of several industry titans, including Apple, Google, and Intel Back. One important resource for startups is a corporate seed fund. These corporate funds are a combination of investments from numerous large firms. To finally turn a profit, they offer a means of investing in more recent and smaller businesses.
3. Incubators: A fund that has completed its first private offering is known as an incubator fund. Fund personnel and their family are oftentimes investors in this kind of fund. Hedge funds often employ incubator funds to test new strategies and offers.
4. Accelerators: Programmes designed to accelerate business growth have this as their goal. The expert and mentor services provided by accelerators help firms flourish. Accelerators, however, do not assist early-stage innovation in startups. Accelerators take the equity because of features that are sponsored privately. Techstars and Y Combinator are the best accelerators.
5. Angel Financiers: Angel investors provide cash money to firms who are experiencing growth problems in their initial phases of operation. The programme offers capital in lieu of ownership equity.
6. Individual Funds: In this kind of business, seed capital comes from the founders’ savings and fortune. In this instance, the founders are unable to demand the repayment of the money they borrowed.
7. Funding for Debt: Debt funding typically refers to funds given as loans by banks or other financial institutions. In the event that you have taken out loans from friends and family, this category also applies. Venture capitalists may also provide you with loans rather than stock investments.
8. Convertible Securities: Convertible securities are relevant when seed round loans become equity, depending on the company’s development or expansion. One well-known strategy is to convert loans into shares, which often happens once the revenue objective is met.
9. Venture Capital Funding: Venture capital (VC) refers to private equity and funding that investors give to start-ups and small firms that have the potential to grow over the long run. Investment banks, other financial institutions, and rich people generally fund most venture capital. The fund providers own a stake, or equity, in the fund they offer.
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