In venture capital terminology, the term Seed Money refers to the first round of financing for a start-up corporation. Seed Money is usually provided to the new enterprise by someone with a connection to the business, and it provides the funds for the company to operate until other funding is available or the company can finance itself.
For example, Seed Money often finances the first expenditures made by the new business enterprise and is spent mostly on research and development. Seed Money is often put up by the founders of the business by using their savings, mortgaging their house, or by taking credit card advances. Sometimes Seed Money is borrowed from friends and family. Seed Money providers may also be angel investors or Venture Capitalists which have some sort of connection with the founders of the business. Seed Money differs from Venture Capital in that Seed Money usually involves a much smaller amount of money, and many people start up in business with as little as $10,000 of Seed Money.