Inc. asked Larry Seibert, regional manager of the Northeast Tier Ben Franklin Technology Center, in Montoursville, Pa., to answer some common questions about seed capital.
Q: When is seed money appropriate?
A: It's right for entrepreneurial or fledgling companies that need working capital to grow but are too young or too small to qualify for bank loans, venture capital, or other traditional forms of investment. The companies don't have to be profitable, but they should have strong market prospects and management.
Q: How much money can a company raise?
A: It depends on the nonprofit's guidelines. At Ben Franklin we'll typically invest from as little as a few thousand dollars up to about $35,000. But if we believe that a company needs and can handle a larger infusion of capital, we'll often work with it to raise additional funds elsewhere.
A: We'll do a lot of hand-holding -- which is something growth companies should look for from any nonprofit that operates a business-seed program. We'll introduce business owners to bankers or even early-stage venture capitalists if we think there could be a good fit.
Q: Do companies need to have their financial records and multiyear business plans in order before applying for seed capital?
A: It certainly helps. But our organization and others like us are willing to work with promising entrepreneurs to help them develop good business plans.* * *