Seed money
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Seed money is money that is used for the opening for a new business to pay for such preliminary stages as market research and product development. Potential business owners may use savings, remortgage, or raise funds from family and friends. A more business oriented option is to seek out angel investors, venture capitalists or accredited investors who may have an interest in the business and would be willing to invest in it. Seed capital does not need to be a large amount of money. Many people start up new business ventures with $10,000 or less. Seed money is not venture capital.
Seed money can can also come from financial bootstrapping. Bootstrapping in this context means making use of the cash flow of an existing enterprise. If an entrepreneur focuses on selling products and ensuring early payment, this is the most obvious way of generating seed money. However, as well as raising the bridge, an entrepreneur can lower the water. Other means of garnering or conserving seed money include purchasing second-hand equipment rather than new or leasing rather than buying; paying sales people or agents on commission rather than having people on the payroll.
Frequently an aspiring entrepreneur may think that he or she must spend all their early energy on raising finance, but often too much money is more disabling than too little. If cash is tight, the startup will be concentrated on essentials. Even after revenue is being earned, cash flow management will be the most significant determinant of early survival.