Definition of seed capital

Also known as seed money, this is equity funding provided by professional investors for start-up companies or pre-start ups, typically to finance their product development and to test their business plan.

Example
Founded in 1976, Genentech, a biotechnology company, was financed by Kleiner, Perkins, Caufield & Byers (KPCB), a San Francisco high-tech venture capital firm, and by co-founders of Genentech, Robert Swanson and Herbert Boyer.

Genentech raised $35 million in an IPO in 1980. The company currently employs more than 3000 employees and is 66% owned by Roche Holding, a pharmaceutical company. [1]

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