A seed round is an initial round of raising money and a great way to gain investments to fund many of your startup expenses such as early product development, office rental, employee salaries, or market research. Your business can use money from the seed round to iron out financial wrinkles in your business model, which helps lay a solid foundation for your business’s success.
During this round, you can secure investors who provide guidance and support to help solve problems you may come across at the early stages of your business. Investors involved in your seed round usually want stock options, equity or convertible notes in return for the money they put into your business. At this stage of starting your business, you must persuade investors that you have the customers, public interest, available revenue, and business model to grow your business.
If you are unable to self-fund the business with your own money or with investments from friends and family, you can use money from a seed round to develop your idea or product into a complete business. Whether you need to hire the best staff or create an innovative marketing campaign, money from this round serves as the fuel to help propel the growth of your business.
When thinking about raising a seed round, ask yourself:
- Do you need to fine-tune your business model?
- Do you want more time to engage key business partners?
- Do you need flexibility to change course or adapt to your industry?
If you answer yes to any of these questions, a seed round will offer your business a range of benefits.
For your small business to grow and become as successful as you plan, you will need the money and partnerships that raising a seed round gives your business.