Seed funding is the initial capital raised by a startup to begin developing its product, build a team, and validate its business idea. In India’s thriving startup ecosystem, seed funding plays a pivotal role in turning entrepreneurial dreams into reality. It is often the first official equity funding stage, where investors provide capital in exchange for equity or convertible debt.
For many entrepreneurs in India, seed funding acts as a lifeline during the early, high-risk stages of business when there is little to no revenue. The funds raised are typically used for market research, product development, building a minimum viable product (MVP), legal compliance, branding, hiring, and covering other operational expenses.
Seed funding can come from a variety of sources, including angel investors, friends and family, startup incubators, venture capital firms specializing in early-stage investments, government grants (like Startup India Seed Fund Scheme), and crowdfunding platforms. Angel investors, in particular, are a common source in India—they not only provide funds but also offer mentorship, guidance, and access to valuable networks.