Seed funding, or seed capital, is a relatively small amount of money that is used to start a business, fund research, or develop a product. Family members, friends, crowdfunders, and angel investors usually provide seed funding in return for a share of equity (or ownership) in the company.

The term’s reference to a “seed” is quite fitting. A tiny seed can someday grow into a lush forest. A tiny investment can help a struggling startup grow into a successful enterprise.

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