The Seed Round is the first official round of investment a startup takes from external, professional investors. It typically follows the "Pre-Seed" stage (money from friends, family, and very early angels) and precedes the larger, institutional Series A round.
The purpose of the Seed Round is to provide the "seed" capital required to transition the company from a prototype or an idea (MVP) into a structured business that has validated its basic model and achieved initial Product-Market Fit (PMF).
Key Characteristics
- Size: Varies heavily by location and sector, but generally falls between £500,000 and £3 million.
- Source: Seed Rounds are typically led by well-known Angel Investors or dedicated seed-stage Venture Capital (VC) funds.
- Goal: The capital is used to hire the foundational team (first engineers, first sales lead) and fund the first 12–18 months of runway while the company perfects its product and sales process.
Instruments Used To speed up the process and avoid lengthy valuation discussions, Seed Rounds frequently use convertible instruments like SAFE Notes or (in the UK) ASAs. These convert into equity only when the company raises the subsequent, more formally priced Series A round.
Key Takeaway: A Seed Round is not money for growth; it's money for learning and validation. You use it to prove your core hypothesis and earn the right to raise a Series A.
