Seed capital is the first outside capital that a company raises and can be vital to the success of a fledgling business. Capital is necessary for building a team, acquiring customers, and generally everything a startup needs to get off the ground.
Most companies in the tech ecosystem raising seed capital decide to do so either via convertible notes or SAFEs (Simple Agreements for Future Equity). Some companies do issue preferred stock to raise seed capital, but issuing preferred stock often takes a lot of time and legal spend, both of which are in short supply for most startup founders.
Whether a company issues convertible notes or SAFEs will largely depend on the appetite of potential investors. SAFEs have the advantage for the investor of being extremely simple to negotiate (it's often only the amount of the SAFE, the valuation cap and the discount that are negotiated). Convertible Notes have the advantages of including interest and having a higher preference in a company's liquidation stack. The intention of both instruments is to convert into equity of the company on advantageous terms when the company does its next preferred equity financing.
No matter what structure a company uses to raise its seed capital, it is valuable to discuss any securities issuance with a competent attorney who can advise as to how the capital raise will affect the company and the stockholders and how to make sure that the company complies with all securities laws when raising money.