What is referred to as the money needed to start a business, often sourced from personal assets?

• A. Operating capital
• B. Seed capital
• C. Equity financing
• D. Angel investment

Answer: (B)

Seed capital refers to the money required to start a business and is typically sourced from an entrepreneur's personal assets, contributions from family and friends, or initial investments from early-stage investors. This type of funding is crucial for covering the initial expenses that a new business incurs, such as product development, market research, and setting up operations.

The importance of seed capital lies in its role as the foundation for launching a business idea into a viable entity. It helps bridge the gap before a business can attract further investment or generate its own revenue. Seed capital is often used to validate the business concept, attract future investors, and secure loans or other types of financing.

Other funding options, such as operating capital, equity financing, and angel investment, play different roles in business financing. Operating capital generally refers to the funds used for day-to-day operations once a business is established. Equity financing involves raising money by selling shares of the company, which typically occurs after the seed stage. Angel investment refers to funds provided by affluent individuals who invest in startups, often in exchange for equity, usually later in the business lifecycle than initial seed funding.