Short answer
Seed capital is the first outside money a startup receives to validate its idea or build a prototype, before it has sales. It can come as a non-repayable grant (for example, CORFO's Semilla Inicia in Chile), as an investment in exchange for equity (accelerators and angel investors) or as a loan. To get it, pick the source that fits the stage of the project, prepare a pitch with validation evidence and apply to open calls before their deadline.
What is seed capital for?
It funds the riskiest stage of a startup: going from an idea to something that can be shown and tested with real customers. It usually covers a prototype or minimum product, the first market tests and part of the founding team's time. Since there are no sales yet, whoever puts in the money mostly evaluates the team, the problem and the evidence that the problem exists.
The three most common sources
- Non-repayable public funds: a government agency covers part of the project without taking equity. Example: CORFO's Semilla Inicia in Chile funded up to CLP 15,000,000 (75% of the project) for ventures at the idea or prototype stage with no sales, and up to CLP 17,000,000 (85%) for women-led ventures. Terms change with every call, so always read the current rules.
- Accelerators: they invest a fixed amount in exchange for a percentage and add mentoring and a network. Example: the Y Combinator standard deal is USD 500,000, made up of USD 125,000 for 7% through a post-money SAFE and USD 375,000 on an uncapped SAFE.
- Angel investors: individuals who invest their own money at early stages, usually in exchange for future equity through convertible notes or SAFEs.
What do funders ask for?
It depends on the source, but at this stage nobody expects sales. What is almost always evaluated is a clear problem and who it affects, evidence that it exists (interviews, tests, pilot users), a team able to execute and a concrete plan for what the money will achieve and in how much time.
Public funds add formal requirements. In Semilla Inicia, for example, applicants could be individuals over 18 living in Chile or companies less than 18 months old with no sales.
How to get it, step by step
- Define the real stage of the project: idea, prototype or first sales. That rules out the sources that do not fit.
- Choose between a grant and an investment. A grant does not dilute ownership but requires reporting on how the money is used; an investment brings in partners in exchange for a share of the company.
- Look for open calls and write down their deadlines. On Startus, current calls are listed with their deadline, industry and eligibility.
- Prepare the material: a pitch with the problem, the solution and the validation evidence, plus a budget for the use of funds.
- Apply to several calls in parallel, following the rules of each one, and ask for feedback when the answer is no.
Common mistakes
- Applying to a fund designed for a different stage.
- Asking for an amount without a clear plan for using it.
- Leaving the application for the last day and missing a formal requirement.
Sources
Frequently asked questions
Do you have to pay back seed capital?
It depends on the source. Non-repayable public grants are not paid back, although you must report how the money was used. Investment from accelerators and angel investors is paid with equity in the company. Loans are paid back.
How much money is seed capital?
There is no fixed amount. As a reference, CORFO's Semilla Inicia funded up to CLP 15,000,000 per project and the Y Combinator standard deal is USD 500,000.
Do I need sales to receive seed capital?
No. It is designed for the idea or prototype stage. Semilla Inicia, for example, required ventures to have no sales.
Where can I find seed capital calls?
On the websites of each country's development agencies, on accelerator websites and in the Startus calls section, which lists them with their deadline.
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