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Is Seed Money for Startup Businesses right for yours?

Published on 23rd October 2018 - Last update on 29th June 2020

Starting a business in a sector you’re passionate about could be the start of a long and exciting journey, but only if you’re able to raise enough capital, which isn’t always easy. At such an early stage you may not qualify for traditional forms of lending and what capital you do have might be needed elsewhere. However, although it seems like you’re stuck at an impasse, there is another pathway available. If you have the passion, determination and commitment to see your idea into fruition you could raise the capital your business needs to move forward with Seed Money. Seed Money for startup businesses is a great way of raising capital on the back of investor funds but, like any financial decision, it’s a pathway that must be carefully considered. Therefore, here’s what you need to know in order to decide whether Seed Money for startup businesses is right for you.

Why should I apply for Seed Money?

Seed Money, also referred to as Seed Capital, gives you the ability to raise money with the aid of external investors. This could be anyone from private individuals, angel investors or corporate entities to venture capitalists. Because funding is based on the amount of confidence and interest they have in your startup’s potential there’s no set limit as to how much capital you could raise. As such, you could acquire the full amount of capital you need, to invest in key areas such as growth, innovation and day-to-day operations, without having to worry about paying it back later.

Plus, if the investors you’ve accepted funds from are experienced in your sector they could impart invaluable advice as well. Therefore, Seed Money could a very useful option if you’re looking to support rapid growth whilst managing on a limited budget, giving your startup an early competitive edge.

Looking to raise money for your business? Don’t want to give away equity to investors? Apply for Alternative Business Finance or learn more about how your business could benefit.

What should I be aware of about applying for Seed Money?

Although appealing to external investors for Seed Money can be a useful way of acquiring funds to enable you to form the foundations of your business, there are other aspects to consider as well. So if you’re wondering whether Seed Money for start-up businesses is right for you, you should be aware that it is based on securities within your business. This means that, by accepting Seed Money, you’re doing so at the expense of equity (shares) within your business.

Also, you need to make sure that your ideas and expectations for the future align with those of your investors. For instance, some investors might be looking for a quick return and, as such, may encourage you to choose a course which could be great for the short-term, but cause issues in the long-run. In addition, if you’re working with more than one investor, you also need to ensure that they share a similar vision for your business. Because giving away equity also gives them a voice in how your business is run, it could lead to a conflict of interest which might leave you unable to seize upon vital opportunities until a solution or compromise is agreed.

Another aspect to consider is that you also need to present investors with an exit strategy. As your business continues to grow, so does the value of their shares. So, over time, they may decide to reign in their investment and make good on their return, which leaves you with two options. Either you use your own capital (providing you have enough) to buy back their shares or raise the necessary capital through applying for business finance.

What alternatives are available?

Although Seed Money can prove an invaluable means of raising capital during the early stages of your business, success in this area depends on the relationships that you forge with investors. But, if you’re unable to raise sufficient amounts of capital or are unable to find investors who share your vision, don’t worry, there are plenty of other ways to acquire the support your business needs. As well as crowdfunding and P2P (Peer-to-Peer) lending, the Alternative Finance Industry also offers access to a wide range of business finance solutions from a new generation of lenders. As such, by exploring what’s on offer, your early-stage business could qualify for anything from Merchant Cash Advance (MCA), Invoice Factoring, Overdraft Replacement to Asset Refinance. All you need to do is source an agreement that’s appropriate for your business.

Looking for a suitable alternative to Seed Money?

During the initial stages of your business’ development, acquiring the support you need to move forward with your plans can leave you feeling lost. Although Seed Money has its merits and has helped to launch many successful businesses, you may not be willing to give away equity, which could lead to you losing control of part of your business. Instead, you might want to consider seeking out another path. The Alternative Finance Industry is giving more and more business owners the confidence they need to carve out a sustainable future by offering access to a wide range of business finance solutions. Yet with so many to choose from, how can you be certain that you’re making the right decision for your business?

At Rangewell, we’re an Access to Finance specialist who searches over 300 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use to business owners just like you and we’ll also guide you through the application process. So if you’re looking for specialist finance for scale-ups, apply for Alternative Business Finance today or find out more with Rangewell.


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David Harrison

David Harrison

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