Seed money

Seed money is the initial funding of a new business in exchange for an equity stake. This initial funding may be in a relatively small amount, and is used to develop a proof of concept before more significant amounts are raised in later financing rounds to expand the business. Seed money is commonly used to fund research, test markets, and develop prototypes. Someone investing seed money is taking on a significant risk, since the business is unproven at this point and so has a high risk of failure. Seed money is typically provided by the founders of the business, as well as friends and family, angel investors, accredited investors, and crowdfunding platforms.

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