Seed Money: Money that initially starts a new business. It is typically used to finance product development, market research, and business formation. The National Institute of Health’s (NIH’s) and National Science Foundation’s (NSF’s) Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) programs are major sources of seed funding in the United States. The government does not take any ownership of the business in return. Other investors often gain partial ownership of the business and a share of the profits from providing seed funding for the startup.
Universities often provide earlier seed money, ranging from department research funds to competitive university-wide startup funds. These funds help provide preliminary data that supports an SBIR or other research application. Associations supporting life sciences entrepreneurship, women in science, or finding a treatment for a particular disease also may be willing to support the development of a good idea with seed money.
Examples of Businesses Started with SBIR Funds
Did you know that these businesses had early funding from SBIRs?
- 23 and Me
- The Mars Rover
- (Some) COVID Testing
