1. Seed Capital Investment
Seed Capital Investment, as the name suggests, refers to the initial round of
investment required in setting up a company, one that would help get your idea
off the ground. If establishing a company was to be compared to growing a tree,
the seed fund could be compared to watering the plant initially and providing it
an ecosystem necessary for its nurture until it is big enough to grow on its own.
Acquiring seed funds is the initial challenge that entrepreneurs face in
establishing a startup company. As most of the investment agencies in India are
eyeing companies that are looking for expansion, they are very limited options
available for Entrepreneurs looking for seed capital. The reason for this trend
being the risk involved with Seed fund is more when compared to investments
that pertain to expansion in companies. They either generate funds of their own-
through savings and loans or turn towards Family or Friends, humorously
abbreviated as FFF (friends, family and fools), for the Seed fund. Most of this is
done on a trust basis and not everyone is expected to have affluent contacts.
Angel Investors (A mention to the article on Angel Investments can be given) –
unlike the other players in the Investment network like the Venture Capitalists
and Equity Financers- are quite willing to provide the Seed Fund for these Startup
Companies. In return for these investments, they ask for an equity stake in the
company. They also provide financial and legal assistance to the Startup
Companies as well. The number of such Angel Investors is quite on the rise and
looks like there are good days ahead for Indian Entrepreneurs.
With the seed funds acquired, the Startup Companies plunge into activity. The
seed funds might also be used for market research- to see if the market’s ready
for their product- and for product development. This doesn’t take much of a time
as the Entrepreneurs would already have done their homework before plunging
into activity. With the first phase completed, they now get into the first round of
expansion.
Utthishta is one such seed fund that provides funds for startups in return for an
equity stake in the company.

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