Seed capital is the initial stage of funding that helps to turn a prospective venture into a viable business by covering preliminary operations, such as market research and product or concept development. The goal is to develop the business till it is a sustainable entity that is generating sales, at which point additional financing can be sought.

Seed capital is often a modest amount of money compared to the amount of financing needed to develop or expand a business that is already operating. It is not unheard of for a new business venture to start up with $10,000 or less.

Budding entrepreneurs have several options when it comes to raising the necessary seed capital. They can draw on personal assets, such their own personal wealth, home equity or insurance policies. There are also several organizations and incentives programs designed to encourage small business development by, for example, providing access to micro loans, investment matching programs or tax credits. Finally, many business founders either turn to family and friends or angel investors to provide the initial influx of capital.