Seed funding

A seed fund is a type of venture capital fund that focuses on providing early-stage funding to startups. Seed funding is typically the initial investment made in a start up to help them develop and validate their business idea, build a minimum viable product (MVP), and reach key milestones.

The common features of seed funds are:

• Early-stage investment: seed funds, like ours, invest in start ups during the earliest stages of their development when they often have little more than a concept, a prototype, or a small team. This initial investment helps startups cover essential expenses like product development, market research, and initial marketing efforts.
• High-risk, high reward: seed investments are considered high-risk investments due to the early stage of the startups involved. The failure rate of early stage startups is relatively high, but successful investments can yield significant returns.
• Smaller investment: seed funds typically provide smaller investment amounts compared to later-stage venture capital funds. The investment ranges can vary widely but at Development Bank of Wales we offer from £50,000 up to £2 million.
• Proof of concept: seed funds look for startups that have a compelling business idea and can demonstrate market demand for their product or service.

• Support: in addition to capital, seed funds can offer strategic support and mentorship to the start-ups they invest in. At Development Bank of Wales we :

  -  Work closely with several Centres of Excellence and tech clusters

  -  Help our portfolio with talent acquisition. CXOs, Chairs and other Non-Executive Directors can all lend their expertise

  -  Introduce wrap around expertise, for example for scale-ups and exits

  -  Have an operating partner programme for early stage investments

• Syndicate investments: seed funds often collaborate with other investors to spread the risk and increase the pool of available capital for start ups. This can involve forming syndicates or investment partnerships where multiple investors contribute capital and expertise. You can find out more about the syndicates we offer through our angel investors.

While seed funding is commonly associated with tech startups, it's not exclusively limited to them. Seed funding can also be provided to other types of early-stage companies such as small businesses and innovative projects.

Seed funding can be used to kick-start operations, develop products or services, and achieve initial market traction.

It can also be used for development to support technology initiatives that have the potential to be disruptive.

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In our guide, we give some key tips and break down the various components of creating a pitch deck.

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Take a look at our guide to valuing a tech startup for more information.

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Find out more in our guide on intellectual property for tech startups.