For startup companies to purchase equipment, rent offices, hire employees and grow their operations, they often require outside capital. This capital is called seed funding. Seed funding is typically the first official round of equity financing a company receives and represents an opportunity to secure funds from investors who see the potential in your startup’s idea and its execution. It can be challenging to get this early-stage funding, but it is possible with persistence and preparation. During the seed-funding stage, you’ll need to clearly demonstrate your business model and market fit, and be able to communicate the value of your startup. You should also be ready to negotiate with investors about terms like valuation and the amount of equity they’re willing to give up in exchange for their investment.
Investors invest in startups because they believe the company has potential to grow, and they want a stake in that growth in return for their money. Depending on the size of their investments, they may want to take an active role in decision-making or take a hands-off approach. Alternatively, family and friends may fund startups for the price of a small share of the company’s equity.
Grants are non-repayable funds that a grant maker (often a government department, corporation, foundation or trust) disburses to a recipient. The eligibility criteria and application requirements for grants vary, but they’re often based on the broader goals of the grant program, such as innovation, social impact or technological advancement. The process of securing grant funding can be lengthy and requires extensive research into the specific requirements for your startup and its proposal.