Seed Round

A seed round is a start-up's first institutional financing round and funds the path from a working prototype to a marketable product with first paying customers. It follows the pre-seed stage and precedes Series A. Capital comes from business angels, specialist seed funds, early-stage VCs and public schemes such as the High-Tech Gründerfonds, frequently through convertible loans or SAFE-style instruments rather than a full priced round.

The money goes mainly into building the team, finishing the product and first sales activities that demonstrate customers actually pay and stay. The round is normally sized for 18 to 24 months of runway, precisely the time needed to reach the metrics a Series A will demand. Legally this stage often produces the first full set of documents, with a shareholders' agreement, preferential rights, anti-dilution protection, founder vesting and an employee option pool.

No reliable earnings are expected at this stage. What is expected is evidence that paying customers actually use the product and that acquiring and retaining them can be made repeatable. At this stage the valuation arises less from a calculation than from the relationship between capital needed and acceptable dilution.