WHAT IS SEED FUNDRAISING?
The initial capital raised by any company is called seed capital and Seed fundraising is the process by which startup businesses seek financing from outside investors or a bank.
Seed Capital
Obtaining seed capital is the first and the foremost important stage for a startup to grow. The initial capital raised by any individual or a startup company is called the seed capital or sometimes also referred to as seed funding. In this, the investors invest in the startup company in exchange for an equity stake in the company. Much of these funds are generally from close friends, family, or themselves.
Pre-seed Capital
Pre-seed capital or pre-seed funding is that period in which a company is about to get off the ground and the funders are usually their close friends, family, or acquaintances. The goal of pre-seed funding is to demonstrate that your brand fulfills the market needs, unlike seed funding which serves the purpose of proving the brand market fit.
10 Things to avoid in seed funding and pre-seed funding
So, now that you know what exactly is seed funding and pre-seed
funding let’s talk about some common things that you should avoid:
1. Don’t ever ask a VC to sign an NDA.
2. Don’t be dishonest with the investors.
3. Don’t bombard investors with cold emails.
4. Don’t communicate a range.
5. Don’t be slow to follow up or close a deal.
6. Don’t hand over the negotiation to your lawyer.
7. Don’t show an over or underdeveloped product.
8. Don’t break an agreement- verbal or written.
9. Don’t fundraise too early.
10. Don’t spend money unwisely.
