Definition of Seed Capital

What is seed capital? What is the definition of the term seed capital?

Seed capital is the money that is used to start a business.

For instance, Joe Smith has decided that he is going to start his own social networking site. Smith starts out on his own, using $20,000 of his own money to hire coders to build the site.

Seed Capital - Definition - IllustrationThis $20,000 is considered "seed capital".

Seed capital can also be raised from other places such as close friends or family members.

"Seed capital" is raised after an initial business idea is conceived. "Seed capital" will (hopefully) take a business from an idea to something more substantial.

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