The term ‘seed funding’ or ‘seed fundraising’ doesn’t actually have a legal meaning. The term ‘seed’ just refers to the initial growth stages of a business. So, in practice, usually refers to the first main round of funding a company will experience (perhaps, following a ‘friends and family’ round).
There are a number of specialist Seed Investors. Some of the best well known seed investment funds include ‘Seedcamp’, ‘Fuel Investors’, ‘Entrepreneurs First’, ‘Forward Partners’ and others. Often, early stage investment funds like these also provide ‘bootcamps’ or ‘accelerator hubs’ to help new companies develop and grow their businesses. As the numbers of investor funds increase, it’s worth doing your homework to see what else, apart from just the money, the fund may help you with.
In addition to the investment funds, there are also a large number of individual seed investors, often called ‘Angel Investors’ who may be interested in investing in your company. Again, its worth doing your homework in terms of seeing which other companies these investors have invested in and speaking to them to see what they said about the experience!
To attract Seed Investors, you should prepare a suitable Business Plan, Pitch Deck and Share Cap Table (see above) and also a Term Sheet.
The Term Sheet will set out details of your existing company structure (directors, shareholders, any earlier fundraisings) and the proposals you are making to investors for the current investment round. For example, the number of shares being offered, the share price and the pre- or post- investment valuation of the company.