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Seed Capital InvestmentSeed Capital Investment, as the name suggests, refers to the initial round ofinvestment required in setting up a company, one that would help get your ideaoff 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 itan 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 inestablishing a startup company. As most of the investment agencies in India areeyeing companies that are looking for expansion, they are very limited optionsavailable for Entrepreneurs looking for seed capital. The reason for this trendbeing the risk involved with Seed fund is more when compared to investmentsthat pertain to expansion in companies. They either generate funds of their own-through savings and loans or turn towards Family or Friends, humorouslyabbreviated as FFF (friends, family and fools), for the Seed fund. Most of this isdone 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 Capitalistsand Equity Financers- are quite willing to provide the Seed Fund for these StartupCompanies. In return for these investments, they ask for an equity stake in thecompany. They also provide financial and legal assistance to the StartupCompanies as well. The number of such Angel Investors is quite on the rise andlooks like there are good days ahead for Indian Entrepreneurs.With the seed funds acquired, the Startup Companies plunge into activity. Theseed funds might also be used for market research- to see if the market’s readyfor their product- and for product development. This doesn’t take much of a timeas the Entrepreneurs would already have done their homework before plunginginto activity. With the first phase completed, they now get into the first round ofexpansion.Utthishta is one such seed fund that provides funds for startups in return for anequity stake in the company.
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