Glossary Term
Seed Funding
Definition
Seed funding is the initial capital raised by a startup to begin operations, develop its product or service, and establish its business model. This funding typically comes from early investors, including founders, friends, family, angel investors, or seed venture capital firms. Seed funding is used to cover early-stage costs such as product development, market research, business operations, and legal fees. The goal of seed funding is to help the company reach key milestones and prove its viability before moving on to more substantial funding rounds like Series A.
Relevance to the MedTech Industry
Seed funding provides startups with the financial resources necessary to move from the idea or concept phase to the early stages of business development. It helps entrepreneurs validate their business models, build prototypes or minimum viable products (MVPs), and start engaging with potential customers or markets. Seed funding allows companies to develop the infrastructure needed to attract further investment and scale operations.
Additional Information & Related Terms
Related Terms
Venture Capital (VC): Funding provided by investors to startups and small businesses with high growth potential, often in exchange for equity.
Series A Funding: The first significant round of funding for a startup after seed funding, typically used to scale operations and grow the business.
Angel Investor: An individual who provides capital to a startup in exchange for ownership equity or debt.
Minimum Viable Product (MVP): A version of a product with enough features to attract early adopters and validate the product concept, often developed with seed funding.
Equity Dilution: The reduction of ownership percentage in a company due to the issuance of additional shares to new investors in exchange for capital.