Seed money is the capital you provide a project/business to help it grow. This is usually there at the beginning of a project, but for those of us doing webcomics a lack of seed money from the get-go is not a big deal. Our start-up costs tend to be minimal. All we need is a computer, a sturdy net connection, a good host, materials to make the comic, an idea, and time. Most of these we already have around the house.
Seed money becomes important when you want to take your comic to the next level. You can use it to purchase ads, fund your first run of merchandise, upgrade your hosting, or purchase needed equipment. Seed money is a loan you make to your comic with the intention of the comic paying you back, with interest. (This payback doesn't have to be in money, by the way. An increase in readership works too.)
We've all seen them, webcomics that are new and yet seem to be advertising everywhere. How did those comics make enough money for advertising blitzes so fast? They didn't. The creators of those comics stockpiled money away ahead of time. It's easy to do a marketing blitz, when you have the money in hand.
So, where does this money come from? It can come from anywhere. It could be money you've saved out of your paycheck or cash received as a gift. It could come from donation drives or Kickstarter projects. It can come from ads you run on your site.
Just remember, you want to minimize spending when making seed money. In other words, unless you have money, don't ofter items that are going to cost you money to produce. You're trying to make start-up capital, remember? So, with your donation drive, instead of offering a button (a physical item that costs money to make and to ship) offer a download-able wallpaper/comic instead.
It's also important to remember that this is the business's money. It's not your personal munchies fund, it's money for your business when needed. If you keep dipping into your business's funds whenever your own bank account gets low, your business will have nothing to work on. Unless, your business starts dipping into your private funds. This is something that you want to avoid if at all possible. It's very easy to overspend business-wise and find yourself without enough money for your personal essentials. (We've all had experiences with bills that seem to pop out of nowhere.) This is why it's helpful to keep business and personal accounts separate, something we'll get into another time.
As for how much is enough, that's up to you. The amount of money you'll need depends on what you plan to do with it.
Personal experience:
I said I'd share personal experiences now and then, so here's one. Matt and I didn't start out with money set aside for the comic. This made printing the earlier issues a little difficult. When we got married in 2007, my parents send us a check for $500. There wasn't anything that we really needed or wanted, so we both decided to invest that money in RCSI Publishing. So, our wedding present became our seed money. We then used that money to print books and buy a few things the business needed. Oddly enough, we didn't use it to advertise. We've never really done much advertising, to be honest.
We didn't spend it all at once. Instead, we took chunks out when we needed to. Eventually, book sales started to pay for the printing costs.
We also used the $500 as a sort of minimal line for the business's bank account - if we couldn't keep above $500 in the account after a year, then it would be time to rethink doing this as a business. Businesses lose money initially, yes, but they can't continue doing so over a long time. We saw that $500 as a loan that we expected the business to pay back, with interest. And, it did.
"The basic rule of free enterprise: You must give in order to get."
-- Scott Alexander
