Seed Round (Seed Funding)
The initial capital raised by startups to prove their concept, build an initial product, and establish early market validation.
Definition
Seed funding represents the first official equity funding stage for startups. It comes after founders' personal investment and typically before Series A funding. The purpose is to prove the business concept, build an initial product, conduct market research, and demonstrate early traction.
Typical Characteristics
- • Funding range: $500K - $3M typically
- • Investors: Angel investors, seed funds, early VCs
- • Stage: Product development and early validation
- • Equity: 10-25% typically given to investors
- • Timeline: 12-18 months runway typically
- • Focus: Prove concept and achieve product-market fit
Real-World Example
SaaS Startup: Raises $1.5M seed round from angel investors and a seed fund
The funding is used to hire initial team, build MVP, acquire first customers, and validate the business model before pursuing Series A.