The seed money that gets a company off the ground typically comes from
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Understanding Seed Capital
Seed capital can be a relatively modest sum of money and might come from the founder's personal assets, friends, or family. It generally covers only the first essentials such as a business plan and initial operating expenses.
The goal at this point is primarily to obtain more financing, and that means attracting the interest of venture capitalists or banks. Neither is inclined to invest large amounts of money in a new idea that exists only on paper unless it comes from a successful serial entrepreneur.
The Phases of Investment
A startup generally has to move through four distinct phases of investment before it is truly established: Seed capital, venture capital, mezzanine funding, and an initial public offering.
Seed capital and venture capital are often used as synonyms, and in reality, they tend to overlap.
Generally, seed capital is used to develop a business idea to the point that it can be presented effectively to venture capital firms that have large amounts of money to invest. If they like the idea, those firms generally get a stake in the new venture in return for investing in its development.