In the business world of the United Kingdom, Seed Capital and Venture Capital are twin money generating sources you may need especially when you’re starting off your business venture. However, both are not the same technically speaking. Both sources are similar in some cases but yet they differ a lot in so many aspects.
In order to understand what Seed Capital and Venture Capital stand for, there is need to take a look at them from three different angles namely:
– The Definitions
– The Similarities
– The Differences
Seed Capital and Venture Capital have their own separate definitions loaded with meaning. You need to take cognizance of this fact in order to maximize their benefits as they suit your business plan.
Simply speaking, Seed Capital refers to the cash you need to get your business started. This cash could come from your family members, friends and other external individuals. In the United Kingdom, these external individuals refer to UK angel investors. These are wealthy personalities who have what it takes to fund your business at the initial stages. Angel investors
Venture Capital which is also known as VC refers to fund needed to start a bigger business. This time around, the target is mainly for group of individuals who are interested in building real bigger firms or companies. The Venture Capital is mainly provided in real cash in exchange for the shares in the company that is demanding for such fund. Venture capital is mainly sourced from venture capitalists that raise the needed fund from their dexterity in managing the pool of other people’s money. They usually invest these funds in lucrative companies that are sure to yield quality returns. Many times, groups of individuals that want to use venture capitals should be able to establish technological companies, info tech companies, or any other profit yielding business venture with technological background. This is because; venture capitalists believe that such companies when they actually begin operation are likely to grow in leaps and bounds.
Indeed, there are some real similarities between Seed Capital and Venture capital. First of all, both are simply avenues designed to raise good cash for the smooth take-off of business ventures. This is actually the primary similarity you’ll notice in both portfolios.
Another similarity you’ll find lays in the fact of the involvement of the UK angel investors in both avenues. Angel investors based in
Indeed when it comes to the differences, you’re going to discover a lot between seed capital and venture capital. The differences are very clear and direct.
The very first difference you’ll notice is the fact that venture capital is mainly meant for big companies only. As an individual trying to begin your own business, you don’t need to go for venture capital. You won’t get it. This is because, the investors there, are targeting big companies. Hence, venture capital could only be accessed by
Another important difference between Venture Capital and Seed Capital lies in the fact of the various sources of the fund involved. Under the seed capital investment, most UK angel investors involved normally invest their own personal funds directly. On the other hand, when it comes to venture capital, the sources of the fund are not directly from the pockets of the inventors involved. Venture capitalists get the money from the pool of professionally managed fund belonging to others. This is the main reason
Again, another difference between seed capital and venture capital lies in the fact of the usage of such funds. While venture funds are normally used in helping big companies get started, seed capital could be used by a single individual to get his or her business off the start-up line. In most cases, the companies that normally have
Finally, another difference between Seed Capital and Venture Capital is also noticed in the volume of cash that is usually released. While Seed Capital is usually not all that too big money, Venture capital is usually a very handsome amount that can help a big company take off. In this case, the investors are also normally involved in the growth process of the company being sponsored.