Seed, Startup or Development Money? Business English Vocabulary
If you follow business investment, and are studying English, you may be wondering about the difference between the terms seed funding (also known as seed money), start-up funding, and development funding. Honestly, a lot of native English speakers might not know the difference between these terms. Here’s an explanation of the differences.
Seed Funding: When someone has an idea (hopefully a good one) and convinces friends, family and possibly angel investors to give them money to make the idea a reality, we call it seed money. One of the newest ways that people are getting seed funding is from crowd funding. Crowd funding is where you convince a group of people to fund you, often using websites like kickstarter.com. Getting seed money is often is the first stage of funding.
Start-up funding: This is the second stage of funding. Usually this is when the idea has come closer to reality. There is a business plan, and the cost of operating the company is known. Start-up funding is used to actually start operations of the company. This could be to get an office or retail space, buy equipment, etc. During this round of funding you can seek investment from outside sources. Sometimes you can get a loan or you can seek a venture capital firm to invest in your company.
Development Funding: This is when you are operating as a company but you see that if you had some extra funding, you could develop a new product or project and increase your company’s profitability. You now have a better chance of getting a bank loan (assuming your company is profitable) and you also still have the chance to seek venture capital.
Going Public: The last stage of funding a business would be to go public and sell stock certificates. The initial stage of going public is called the IPO stage.
Right now, there is a lot of media attention given to the various funding stages of technology companies, with whole websites like TechCrunch dedicated to reporting on it. Below you’ll find a video of a comedian spoofing the current investment craze. Enjoy!
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