What is seed capital? and what dose it do. why do we call it seed capital?

Seed money, or seed capital, is the first contribution by a venture capitalist toward the financing of a new business, often using a loan or purchase of convertible bonds or preferred stock.

Why is it called "seed"? Because it is the first step towards growing a business, just like planting a seed to grow a tree or plant. Only here, the money is used to grow a new company!

Seed capital is money used to start a business. Also called start up money. This is the money that investors put in to get a business started and then the rest comes later in earnings, revenues, investments, loans, etc. So the 'seed' reference is because it's the small beginning that will grow into a larger enterprise with the passage of time.