Seed Capital . . .

refers to financing obtained by a company before it has completed developing a prototype of its product. Sometimes it refers to capital raised after a company has developed a prototype of its product but before it has manufactured any production units. This is the most difficult and expensive money to raise because it is needed before management can prove that the product will sell or that it can be produced and distributed at a competitive price. The entrepreneur’s family, friends, relatives, and his personal savings are primary sources of seed capital. See: CDCs (Community Development Corporations), Stage Financing.