Finance Roll

Let's go back to our science classes at school for the moment. Remember, how a plant and then a tree comes to existence? It is the seed which is the beginning of all. You plant a seed and nourish it with water and watch it grow over a period of time. Likewise, seed capital is the initial fund that you infuse in your business. It is the startup finances that you (or along with your team) provide to your business that will help it start.

Starting vs. Running a Business

Seed capital is used to start a business and further investments are made to run the same. The funding in case of starting a business is quite small and can be up to $10,000 for a small business. We are not talking of heavy machinery/equipment based manufacturing industries, though. This $10,000 can be collected by you and your group with the help of parents and other donations that may come to you.

What do you do, when you have started a business? Look for other sources of finance, of course! Without money no business can run (read: funding) - be it then an external or internal source. Once your firm starts to run and money rolling is in place, you might not have to seek other sources of funding.

Angel Investment after the Seed Capital

Just oodles of passion and creativity won't actually help much if you can't implement your ideas in the business. Therefore what you require are funds; what your business needs is money! To see your business grow into a fruit bearing tree, you need to provide it with adequate nourishment and that will come from an angel investor. You should know that the initial seed capital is not enough to make the business stand up on its own - you need a stronger foundation and that will come from the angels.

Another important thing - if your project/business has the potential of making it big on the stage, there are high chances that angel investors will be interested in you. Otherwise, there are thousands of such innovators and creative people just like you, waiting for talking to angel investors. Therefore, you need to have your head completely with your business at all times - you have to convince your investors, why should they invest in your business!

It may be the case that angel investors at some point of time were a startup like you and now they have diversified interests (along with their first startup idea). In such cases, getting funds from them could be a tad easier because they might have gone through the same rigors of finding funds to run their venture.

Remember one thing; since your venture hasn't started making profits, there is a great deal of risk involved for the investor. No one will invest his/her money into a venture that shows no promise. Therefore you have to do your homework before hand and convince your funders that this is the best investment, they'd have ever made!