Terminologies Associated with Start Up Funds

Terminologies Associated with Start Up Funds

• Seed capital/Seeding:

It is a form of securities offering in which an investor invests capital in exchange for an equity stake in the company. Seed capital is the initial capital used when starting a business, often coming from the founders’ personal assets, friends or family, for covering initial operating expenses and attracting venture capitalists. This type of funding is often obtained in exchange for an equity stake in the enterprise, although with less formal contractual overhead than standard equity financing. Because banks and venture capital investors view seed capital as an “at risk” investment by the promoters of a new venture, capital providers may wait until a business is more established before making larger investments of venture capital funding.

• Seed Stock:

An investment security that is based on shares of a publicly traded, agriculture-based company is involved in plant research and development. A seed stock is any stock that represents a company that researches and produces seeds for planting crops and develops new seed products to increase farmers’ yields or otherwise improve seed performance.

• Angle investors:

They are an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors invest online through equity crowd funding or organize themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies.

• Incubators:

They work with startups to develop entrepreneurial skills such as building a business around an idea, creating and testing a prototype and understanding the market. Incubator programmes can be relatively long-term – over a year.

• Accelerators:

They offer usually shorter and more intense programmes to hone in on the business model, the market opportunity and the product.

• Co-working:

These spaces are shared offices that typically have open space and offer desk space as well as other facilities such as administrative help or services such as couriers. In addition, there may be formal or informal networks of mentors or entrepreneurs based at the co-working space. India’s largest cities have a number of co-working spaces.