Seed capital is the initial funding provided to startups to develop their business ideas and bring them to a stage where they can attract further investment. This early-stage funding is typically used for market testing, hiring key team members, and developing prototypes, and is often sourced from angel investors or crowdfunding platforms.

In the venture capital landscape, seed capital is crucial for startups to validate their business models and prepare for subsequent funding rounds. It enables entrepreneurs to refine their products or services, conduct market research, and establish a customer base, laying the groundwork for future growth and investment opportunities.