Investment Seeding Quick Guide
Purchasing stock in a company or bonds sold by a company are not the only ways to invest. Investment seeding is a type of ground floor investing that has been around for as long as new businesses have been started, but it has picked up in popularity under other terms such as crowd funding.
What is Seed Capital? Seed capital is the initial investment used to start a business. Depending on the type and size of the business, it is most often contributed by the business owners own assets or from the help of friends or family. Seed capital is used to cover the expenses used to start the business such as early-stage research and development, operating costs and any other expenses necessary to get the business started. Seed capital is usually required from day one, even when the business is just an idea. Money is needed to get the business started and keep it going until it starts to generate cash on its own.
Investment Seeding Opportunities Funding in the early stages of a business can be taken from the founder’s own cash reserves or given by friends and family. Usually these are small businesses such as an internet start up, salon, boutique or restaurant. New forms of investment seeding have exploded with the help of the internet in the form of crowd funding. Crowd funding is when money is given from a large number of people to start up a company. This is often managed by a website such as Kick Starter, Go Fund Me, Seed Invest or You Caring. Crowd funding is when either the investors earn part of the profits or contributors are given one of the first products or services produced by the new company. It gives new business owners the opportunity to make the product or start the service when they don’t have the capital to do so otherwise.
Risks Involved Investing seed capital in a new company carries a high amount of risk because there is no existing company with a business presence or assets. It’s impossible to evaluate anything more than just the idea. New businesses that are not established have a higher failure rate, but they can still be a good investment if seed capital is given in smaller, less risky amounts. Such businesses usual start out small. Investors can contribute modest investments that are still helpful when several people are contributing at once.
This post was repurposed for distribution. To read more news and updates from Jeff Ramson, go to http://www.proactivestrategies.net