Seed Funding: What is Seed Funding?

What is Seed Funding?

Seed funding represents a startup's first significant fundraising round. It comes after the pre-seed phase (founder funding, love money, individual business angels) and before the Series A round. The seed's objective is to provide the resources needed to transform a prototype or MVP into a viable product, validate product-market fit and demonstrate sufficient initial traction to attract Series A investors.

In Belgium, seed rounds typically range from 200,000 to 2 million euros, although amounts tend to increase year after year. Typical seed round investors include early-stage venture capital funds (Volta Ventures, Imec.istart, Leansquare), organised business angel networks (BeAngels) and public funds (finance.brussels, SRIW, PMV) that regularly co-invest at this stage.

Seed funding is a pivotal moment in a startup's life. It is at this stage that the company transitions from a project carried by a few founders to a genuinely structured organisation with an expanded team, defined processes and measurable objectives.

Why Seed Funding Matters

The seed round is often considered the most decisive moment in a startup's journey. It determines the company's ability to reach the milestones necessary to raise a Series A round. Its importance manifests at several levels:

• Product development: seed funding finances building a complete product from the initial MVP. The funds enable recruiting developers, designers and product managers needed to move from a functional prototype to a marketable solution.
• Product-market fit validation: the seed provides time and means to test the product with real customers, iterate rapidly and find the right market positioning.
• First strategic hires: recruiting key first collaborators — CTO, head of sales, marketing — who will form the core of the growth team.
• Traction building: investing in customer acquisition to demonstrate measurable growth (MRR, customer count, retention rate) that will convince Series A investors.
• Legal and financial structuring: establishing the legal and accounting foundations necessary to accommodate larger future investments.

How It Works

The seed fundraising process begins well before the first investor discussions. The startup must first demonstrate it has identified a real problem, built a credible solution and obtained early positive market signals. The MVP developed during pre-seed plays a central role: it constitutes tangible proof that the team can execute its vision.

The seed raise is structured around a formalised funding round. The startup determines the required amount based on its target runway (typically 18 to 24 months), develops a detailed pitch deck and identifies the most relevant investors. Discussions with VCs lead to a term sheet setting the company's pre-money valuation, the amount raised, the type of financial instruments (shares, convertible notes, SAFE) and governance conditions.

In Belgium, seed valuations for tech startups generally range from 2 to 6 million euros pre-money, depending on sector, traction and founding team experience. Investors typically take between 15 and 25% of the equity, leaving sufficient ownership for founders for subsequent rounds.

A distinctive feature of the Belgian market is the availability of complementary public financing. Mechanisms such as SRIW subordinated loans, Walloon Region recoverable advances or the startup Tax Shelter allow optimising the funding structure and limiting founder dilution. These public instruments often combine with private investment to form a mixed seed round.

Concrete Example

Consider a Brussels-based startup specialising in HR process automation for SMEs. The two founders initially funded MVP development with KERN-IT using personal savings and a 50,000 euro Innoviris grant. This MVP, built with Django and React, automates leave management, expense reporting and annual reviews for companies with 20 to 200 employees.

After 6 months, the MVP is used by 15 pilot companies in Belgium. The founders decide to raise a seed round to industrialise the product and accelerate customer acquisition. They approach Leansquare, a Walloon fund, and BeAngels simultaneously. After two months of due diligence, they close a 750,000 euro round at a 3 million pre-money valuation: 500,000 euros from Leansquare, 150,000 euros from a BeAngels syndicate and 100,000 euros from SRIW as a subordinated loan.

These funds finance hiring three additional developers to enrich the platform, a senior sales representative and a customer success manager. Within 18 months, the startup grows from 15 to 120 customers and reaches 300,000 euros in ARR, positioning it ideally for a Series A round.

Implementation

1. Build a compelling MVP: develop a minimum viable product that demonstrates your solution's added value. The MVP must be polished enough to convince customers to pay, not merely a demonstration prototype.
2. Generate measurable traction: acquire first paying customers, even at a small scale. Key metrics to present: customer count, MRR/ARR, monthly growth rate, retention rate, NPS.
3. Prepare documentation: develop a pitch deck of 15 slides maximum, a 3-year financial model, a detailed market analysis and a use of proceeds plan.
4. Explore public financing: in Belgium, combine private investment and public aid (Innoviris, regional subsidies, Tax Shelter) to optimise round structure and limit dilution.
5. Build an advisory board: surround yourself with credible mentors and advisors who strengthen the project's credibility and facilitate investor introductions.
6. Define a clear runway: raise enough to cover 18 to 24 months of operations and reach the milestones needed for the next round, with a safety margin.

Associated Technologies and Tools

• MVP and rapid development: Django, React and modern frameworks enable building a robust, scalable MVP that impresses investors during technical due diligence.
• Metrics tools: Mixpanel, Amplitude or PostHog to measure user engagement and demonstrate traction to investors.
• Fundraising platforms: AngelList, Dealroom and local networks (BeAngels, BAN Vlaanderen) to identify and approach relevant investors.
• Financial modelling: Causal, Abacum or Google Sheets with structured templates to build credible financial projections and dilution scenarios.
• Investor communication: Visible.vc or Notion to maintain regular, transparent reporting with your investors after closing the round.

Conclusion

The seed round is the springboard that propels a startup from prototype stage to growing company. In Belgium, the ecosystem provides fertile ground for seed raises thanks to the combination of active private funds, structured business angel networks and complementary public instruments. The key to success lies in preparation: a solid MVP built with the right technologies, convincing traction metrics and a clear execution plan. At KERN-IT, we help startups build the MVP that makes the difference during the pitch — a technically solid, well-architected product ready to scale, demonstrating to investors that the team can execute its vision.