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startup capital

Is Seed Capital Different From Startup Capital?

Another email came in over the weekend asking what the difference is between seed capital and startup capital.

To be honest, it’s a bit of a gray area where people tend to disagree over the definitions. Some claim that both terms point to the same stage of funding and are, therefore, interchangeable.

I prefer to make a distinction as follows:

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How to create startup capital

Even in the new millennium with all the advantages that its offers such the Internet, crowdfunding, and social networking, it’s still extremely challenging to raise startup capital for most ventures. Allow me to explain why. It’s a catch-22 situation because the smart angel investors and venture capitalists want to see some proof first that you have what it takes to be the successful entrepreneur who makes them money instead of losing it. This is reasonable since most people lack the necessary acumen, knowledge, and mindset that one needs in order to get past all the obstacles entrepreneurs are normally always confronted with.

On the plus side, the traditional route to success for entrepreneurs has been to create their very own startup capital. There are a number of obvious ways to do this:

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8 Tips on How to Attract Seed Capital for Your Startup

If you wish to make a better impression with potential seed capital providers, start off by asking them for advice on what you can do to make your startup more attractive to investors such as themselves. In contrast, if you immediately hit them up for money they go on the defensive. It’s human nature. If you don’t believe me take a moment to imagine what you would feel if a someone you just met minutes before asked you for money.

Do your homework on investors before approaching them. Find out which industries they invest in. A great way to lose credibility is by approaching a software industry investor with a food or golf club startup. People like to invest their money in areas that they understand. Few investors are gamblers when it comes to business. (The occasional trip to Las Vegas is a different matter.)

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