Query in financial management

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29 August 2010 What is core different between venture capital financing & seed capital assistance?

Thrissurkkaran Ishtan

Thrissurkkaran Ishtan (Expert)
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07 September 2010 To put it very simply.

You want to start a business, you want a little money to start may be 10 lacs. You go and ask dad, mon, uncle and aunty and gets this money and start business. This is seed capital
You want to start a large business. You need 100 crores. You prepare feasibility report, etc and approach professional companies who can give funds. This is venture capital financing.

So what are the differences (Seed Vs Venture)
Amount is small. Amount is big
Not arms length (relatives, etc). Very arms length and professional.
Small business set up. Large plans, complex set up.
Higher risk. Risk can be high in venture capital also, but it is more methodically understood thourgh analysis. You dad wont do analysis when he gives money as another person.
Business plan may not be clear. Venture guys wont give funds if there is no plan.
You dont do any offering. You just go and talk to uncle, etc. In Venture you will make an offering to many venture capital financing.

The core difference there is one is small and informal. The other is big and formal.

Hope it is clear.

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