Generate Seed Capital in Canada

Much like a planted seed is what turns a field of potential into acres of cash-yielding crops, seed capital is the funding that brings a business from the idea stage to its launch.

In the initial stage of development, companies need seed capital - money that is often used to conduct market research, build a product prototype and pay company expenses - while their business gains momentum. Private investors, often called business angels or angel investors, provide this seed round of funding since securing a loan and gaining capital is hard for new and first-time business owners. Private investors often consist of individual business angels or groups, but in some cases, seed money is provided by the entrepreneur’s friends and family (hence the reference to seed capital in some places as the “friends and family round”).

Since the amount is usually small (generally under $50,000) and usually only covers the business’ initial objectives, business angels are more likely to invest seed capital than banks or venture capitalists in exchange for some control in the company’s operations and financial decisions. Business loans can be expensive for small businesses and rarely offer seed funding for a new business idea, instead you will likely only be able to get a personal loan.

Once seed capital is in place, however, and the business begins to grow, business owners have an easier time seeking investment from venture capital firms. Generally, funding that is available from VC companies can range upwards of $100,000, where the business investors at that point will usually own shares and have a stake in running the company.

The amount of money that an investor is willing to make in your new business can vary and will depend on the type of investor, your business plan, track record or business model. Cash flow generated from institutional investors and private equity can be large sums of money so can make a good funding options for those who prefer to work with an individual investor instead of generating money from venture capital funds.

One way to generate seed capital for a business that is working in the field of product development is to use crowdfunding. A common way this works is that a lot of individuals invest money into a company or idea in return for some kind of reward, such as early access to a new product. As a way of generating working capital for seed-stage companies it can work out, but it doesn't suit all company types so may not work well for all business ideas.

How the Canadian Investment Network Can Help

By getting in touch with Canadian business angels on the Angel Investment Network, entrepreneurs can seize these initial startup funding opportunities, such as seed capital, and get their business ideas on the right track. The network connects entrepreneurs with business angels who are looking to invest in startups or business ideas. Often these investors will come to your business or new venture with a lot of experience so they can offer advice and help you make business decisions. For some small business owners, it can be valuable to have an experienced investor close to hand who has an active interest in your business. Some investors prefer to remain silent, and for some entrepreneurs this can work well for them too. The goal of the Canadian Investment Network is to match entrepreneurs with like-minded investors.

Investors can leverage the Canadian Investment Network to cherry pick investment opportunities that they are interested in, across Canada and the rest of the world. Investors can find entrepreneurs and startups that are looking for investment into their business. Before making investments in a business you should always carry out proper due diligence to ensure that everything is in order.

You can also find out more about Seed Investment at https://www.seedtribe.com