What is Seed Investment

Startups are projects aimed at quickly developing solutions to specific problems. Startups can easily reach large audiences through the development of the problem and solution concept, thereby attracting the interest of investors. The purpose of startup investments, which occur in certain processes, is to develop and improve dynamics such as team, technology, and marketing. The startup investment stages beginning with pre-seed and continuing with seed investment are as follows:

• Pre-seed investment, 

• Seed investment, 

• Series A investment,

• Series B investment,

• Series C investment. 

  
  

What is “Seed Stage” in Startup Investments? 

The questions “What is seed stage?” and “What are the processes of seed stage?” are among those that new startup founders are most curious about. Seed stage processes are considered together with pre-seed investment and seed investment.

What is Pre-Seed Investment?

Pre-seed investment is the first and earliest stage, where investments usually come from the founder and the founder’s network. However, some angel investors may also make pre-seed investments in projects they see potential in. During the period referred to as pre-seed, the project idea is attempted to be materialized with a small working group.

First Official Money: Seed Investment

Seed investment symbolizes the first official money collected as a result of the project you implement and is a very important stage for startups. Seed investment is the trailer for future large investments and, through seed investment, it is possible to foresee the future existence of the project. The seed investment received is recommended to be used in the following channels: 

• Improving the product further,

• Conducting a competitive analysis, 

• Conducting target audience analysis, 

• Accelerating promotional activities, 

• Expanding the working group.

  
  

Types of Investors for Startups 

Individuals who invest in startups differ according to which stage they join the project and the budget ratios they provide for the project, leading to the emergence of several investor categories. Among them, angel investors and venture capital investors come first, both types of investors aim to profit. 

Investing startups work to take their projects into larger markets and aim to promote their names to large audiences, and for this, they not only plan their budgets allocated to the project but also engage in strategic planning. Some investors provide mentorship support by contributing to this planning with their previous experiences. 

What is an Angel Investor?

Individual investors who allocate smaller amounts of budget to startups are referred to as angel investors. It is often possible to encounter angel investors, also known as seed investors, during the seed investment period, but these investors can also make pre-seed investments in promising startups due to their individual nature.

What are Venture Capital Investors? 

Venture capital investors, who allocate larger amounts of budget compared to angel investors, represent professional institutions. These institutions that invest in startups do not engage in the seed investment stage of the projects. 

Venture investors, who make larger-scale investments, aim to invest after observing concrete data and progress regarding the project. If the project reaches a certain stage and manages to maintain a certain audience; venture capital investors will begin to show interest in the project. 

How to Obtain Seed Investment?

For startups to secure investment, there are certain points that investors pay attention to. These include whether the project has future potential, provides a solution to a global problem, and appeals to a wide audience.

Investors typically examine the following factors in the projects they will make seed investments in: 

• Short, medium, and long-term goals, 

• The impact of the offered product or service type on society and globally, 

• Product or service prototype, 

• Market research and competitive analysis. 

Recommendations for Obtaining Seed Investment

You should develop strategic planning aimed at achieving long-term success by considering every detail of your idea. While developing these plans, it is recommended to have a thorough understanding of the market you’re in and to utilize its advantages in the most accurate way. You should be aware of the disadvantages of the market you are in as much as the advantages. 

This way, you can minimize the threats that await you in the long term. At the same time, as a result of this research, you can also maximize the opportunities that will arise in the long term. It is advisable to convey all these dynamics well to your investors and to establish a very transparent communication with them. 

The more you can convey to your investors that you are knowledgeable about the subject and have made all the analyses, the more successful a seed investment process awaits you. Communicating your business idea to more investors and keeping your investor portfolio broad will also be another move in your favour during the seed investment process. You can join the Startupfon ecosystem to connect with investors suitable for your business idea.