Seed Capital

The initial capital invested in a business startup. The term may also refer to initial capital invested in stocks or other investment vehicles. Seed capital is important as it is the beginning of an investor or entrepreneur’s career.

Seed capital usually comes from savings or family and friends that can be persuaded into the idea (also known as angel capital). However, seed capital can also come from venture capital firms that are looking for a high risk high return investment. For an investor, protecting one’s seed capital is important for future growth. A large drawdown may be difficult to easily replace. As Buffett would say, the first rule of investing is don’t lose money. Rule two would be, don’t forget rule one.

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