seed money

Seed money

The first contribution by a venture capitalist toward the financing of a new business, often using a loan or purchase of convertible bonds or preferred stock. See: Mezzanine level and second round.

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seed money

Funds provided to finance the initial stages of a new venture. Seed money may be utilized to conduct research, develop the prototype for a product, or determine if an idea is workable or economically viable.

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seed money

Money used for the initial market research and/or operations for a company. Seed money is vitally important because without it, a company can hardly come into being, let alone become successful. It may come from a loan, an initial public offering, or from another source. For example, Ross Perot is famously said to have established Electronic Data System with $1,000 in personal savings; in this case, Perot's savings account contained his seed money. See also: Seed round.