Seed Stage Financing
In venture capital terminology, the term Seed Stage Financing refers to the stage in a new company's growth which is characterized by the founder's management, development of a business plan and testing of prototypes or beta-testing.
Because the company is still new, the term 'seed' is used because the Seed Stage Financing money will hopefully grow along with the new company. Often, seed money is provided by the founders, the founder's family and friends, or others close to the business. Seed Stage Financing can also consist of equity financing which means that stock is issued for new investors. This is usually the case when an Angel Investor or Venture Capitalist gets in at this early stage. The stock or equity represents ownership in the company and is often convertible to common shares when the company has its Initial Public Offering.