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The significance of seed capital in startup ecosystem growth
The startup needs three pivotal resources to incept the venture.
They are ideas, funds and people. Ideas can be inspired and adapted from
anything; people can be acquisitioned but funding needs not just a moneylender
but a strategic mind. Devising the prototype of the disruptive idea,
entrepreneurs look for the level up. The prototyped concept has to be tested,
for which seed capital is required. It is the first official money raised by
the venture from investors. The first and primary stage for any
entrepreneur that decide their informed decision-making skill. The nascent step
determines the visionary growth of the process and through seed funding, the
venture gets off the ground.
Seed funding is important for any business to land on the ground.
It provides your business with funds even before your business has started
earning. Seed capital provides you with working capital to smoothly run your
day-to-day business. It also makes the scaling-up process much easier. Seed capital is the founding stage where entrepreneurs must be aware of choosing
the right pedigree of investors without falling for money lenders (financiers).
Capital alone cannot build a great, enduring business. Angel and VC partners
bring capital along with industry experience, mentorship, and introduction to
key customers, executives and other investors. Funding received from the ideal
investor kicks off a positive cycle. Incepting your venture with the right seed
investor can open doors that help you in talent acquisition, business deals,
and meet the requirements to lead series A.
The three biggest challenges any aspiring
entrepreneur faces are access to capital, guidance from people who have done it
successfully before, and the pliable environment in which the idea can be best
executed. The seed capital funding from the right investors will confer all these
three supports with their business acumen as they have experience in dealing
those situations.
Seed investors render financial and legal
assistance to startup companies as well. They act as financial advisors
in some instances. The emerging days for Indian entrepreneurs are filled with
optimism, as seed funders are increasing day by day. The best angel investors
and seed funds have a global footprint and take their portfolio companies
global from day one.
The startups that go global from day 1 grow
revenue 2 times faster and focus more on their country. There is a drastic
difference between startups that think global and those that don’t. The global
mindset is instilled by the strategic investor who has the degree of global
exposure. The seed funds can bring growth to the startup ecosystem with the
deal flow, reach and global mindset. The network of professionals with the seed
capitalist will add up credits to the venture. Finding the right investors is
like you are getting in with the mentor, strategic guide, capitalist, partner
and confers great support to the new aspirants. The investor acts as the source
of working capital; assists in expanding the business relationship by bringing
strategic partners.
Difference between financier and investor
The monetary support in the early stage of a
startup can transform them into a successful business. Hence, the first phase
of acceleration and scaling up begins with the right choice of the investor.
When the business is at the stage to take off, entrepreneurs tend to say yes to
anyone who offers funds. Forge a full-stop to it by interpreting the difference
between financier and investor which withhold the purpose of seed capital. The
entrepreneur decides the profile of the investor needed for the venture and by
analyzing the industrial background. For instance, if you are planning to start
a B2B related startup, then seek investors who are known to fund for similar
sectors.
Seed financing is the riskiest form of investing.
It involves investing in a company in its earliest stage of development before
knowing its future growth. whereas, financiers or money lenders don’t probably
scrutinize the business from an industrial perspective. Money lenders provide
capital for the startup with the expectation of immediate profit or results.
Taking the baby steps, a startup should be supported and guided by investors on
the growth process rather than a profit-making process. An investor is someone
who believes in your business, wants you to grow and is more like a partner
while a financier is less equipped with business acumen, focusing only on
earning potential and not on long-term growth.
The initial capital raising process from the
ideal and professional investor will surge the startup to climb up to the next
league. Setting the ladder
towards the next league can only be possible by associating with the right
investor. After the seed funding, if the investor is enticed with the
outcome and visionary plans, then the seed investor turns into a venture capital for the next series of funding. To attract seed capital investment
from strategic investors, you have to build astute entrepreneurial prospects.
Laying the exceptional grounding process determines the prolific growth of the entity. Hence, make the right step of choosing the ideal investor for your startup-based profile. Since seed capitalists are the nurturer of startups, increased seed investors and their attention towards new aspiring entrepreneurs will support the development of the startup ecosystem in India.
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