Question

Why and when is seed capital needed?

Hint:

Seed capital = First funding to turn an idea into a business.

Answer 1

Step 1: Meaning of seed capital.
Seed capital (or seed money) is the initial funding required to start a new business or project. It is called “seed” because it acts as the foundation for growth, just like a seed grows into a tree.
Step 2: Why it is needed.
1. To conduct research and feasibility studies before launching the business.
2. To purchase basic equipment, machinery, or technology for initial operations.
3. To cover working capital needs like salaries, rent, and administrative costs.
4. To create prototypes and test products in the market.
Step 3: When it is needed.
Seed capital is required at the very beginning of a business, during the “idea stage” or before the company generates revenue.
Step 4: Conclusion.
Seed capital is the lifeline for startups, enabling them to convert ideas into reality.