Seed Stage

Financing in seed stage isn’t likely to involve any complicated transactions, because you won’t have too many options. After all, when you open up your beachside lemonade stand, investment banks such as Merrill Lynch or Goldman Sachs won’t be hanging around offering to do an initial public offering to raise money for you. With a modest amount of resourcefulness, you should be able to either self-finance through your own savings or selling off personal assets. Otherwise, if you are sufficiently enthusiastic and competent in your presentation, you may be able to convince your close friends or parents to either lend you the money or invest as partners.

You have probably heard the expression, “a self-made businessperson.” Well, don’t take it too literally. Almost every successful entrepreneur receives some technical assistance, financial assistance, and/or advice along the way.

• When Bill Gates started his business in his garage, he convinced an older friend, Paul Allen to provide the seed money for his start-up idea.
• Google founders Sergey Brin and Larry Page were a bit more sophisticated than your average youth start-up, since they were graduate students at Stanford. However, they still found it necessary to get friends to invest a high percentage of their savings in the new enterprise. And guess what? We hear they’re still friends of Sergey and Larry!

Seed stage is exciting. Your mind runs rampant with ideas. But remember, if you plan to grow a stable, profitable enterprise, it all has to be formalized into a solid business plan.

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