Seed funding

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Seed funding is investing capital to begin a new project, so that it has enough funds to sustain itself for a period of development until it reaches either a state where it is able to continue funding itself, or has created something in value so that it is worthy of future rounds of funding.

Seed funding involves a higher risk than normal venture capital funding, as the investor does not see any existing project to evaluate for funding. Hence the investments made are usually lower (in the tens-thousands to hundred-thousands of dollars) as against normal venture capital investment (in the hundred-thousands to millions of dollars), for similar levels of stake in the company.

Investors make their decision whether to fund a project based on the perceived strength of the idea and the capabilities, skills and past history of the founders.