Is Seed Investment The Easiest Way To Make Big Money?

When relatively large companies come to the stock market, perhaps a new technology companies such as Snapchat, we often hear about seed investors making hundreds of millions of dollars. Time and time again the headlines suggest that seed investors have made a massive return on their initial outlays. This gives the impression that seed investment is the easiest way to make big money but is it? Are the headlines perhaps a little skewed? Can it really be that simple to make big money?

What is seed investment?

In simple terms seed investment is early stage investment in a new company before it lists on the stock market or other similar entity (although not all companies do float on the stock market). The whole concept of seed investment is based on the idea of feeding a “seed of an idea” and making it grow. Many companies have made significant returns on early-stage investments but you don’t always hear about the ones which have crashed and burned costing investors hundreds of millions of dollars.

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"Seed investing" is generally best left to those with very deep pockets and who have access to all of a company's info before it is able to be accessed by the public via IPO.

 

I think it is not what you know but who you know and how rich you are when it comes to seed capital - not available to the average investor.