In the business world, venture capital and seed capital are twin funds generating sources that individuals may need especially when they’re starting off their business ventures. Although both sources are similar in a few cases, they differ a lot in many cases.
Both venture capital and seed capital are avenues designed to raise money for smooth take-off of business ventures. Another similarity lays in the fact that angel investors are involved in both avenues. For instance, angel investors in the UK provide seed capital to people that need them. In the same vein, some UK angel investors are involved in venture capital.
Seed capital is the money you need to start your business. The money could come from your friends, family members and other external individuals. In some countries, these external individuals are referred to as angel investors. Simply speaking, seed capital is the fund a person needs to get his/her business off the ground. On the other hand, venture capital is the fund required to start a bigger business. The target is primarily for individuals who want to build big companies or firms. The venture capital is mainly offered in real cash in exchange for the company’s share.
The difference between seed capital and venture capital also lies in the sources of the fund involved. In the seed capital investments, most angel investors invest their own personal money. When it comes to venture capital, money invested is not directly from investors’ pockets. They get the funds from the pool of professionally managed funds that belong to others.