Summary:- What is seed capital and where to get seed capital

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seed capital .

Seed financing or seed money used for the early investment in a project or startup company, for proof-of-concept, market research, or initial product development.

Tends to be the next source of investment after the Business Angels have chipped in.

A typical selection criteria for London seed capital investors has to meet all the following points:-

1. The company is an SME (less than 250 employees and net worth less than 5m)
2. The business of the company is operated in England
3. Its investment is at least matched by business angel investors 4. The total equity investment in the round is less than 400,000
5. It is investing on terms that are at least as favourable as the business angels.
6. Located in the London or Home Counties region of UK
7. High growth, i.e. scalable business model with a strong USP and highly ambitious management seeking an exit (flotation or trade sale) within three to five years
8. A product or service that can be taken to market without further development (i.e. past the initial concept stage)
9. Some validation within the market place, either through Value Added Resellers/partners or through actual sales
10. An up to date and comprehensive business plan, including executive summary, is available
11. Strong management team with skills to grow business in line with projections
12. Significant commitment to venture already demonstrated by management, preferably cash. Management prepared to discuss conversion of any existing loans to equity and ideally investing in this round
13. Cash being raised will last the company at least 12 months
14. Realistic pre-money valuation
15. Prepared to accept syndicates of angel investors with part time representation on board
16. Independent company, i.e. not a subsidiary - more than 30% owned by another company

In short, they will jump on the back of a project that other, approved, Business Angels have had the courage and acumen to fund so long as they can cut the same deal.

 



Before approaching anyone for a business loan, it is essential to make up a business plan in a format that can be easily read by the prospective source of funds.
It is important for the main facts to be brief but complete and supported by further documentation if required.
A business plan that resembles a short novel full of hype is not the way to attract backers.
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