This study examines how seed money from Kudumbashree and digital investments jointly influence the entrepreneurial performance of women-led Small and Medium Enterprises (SMEs) in Kerala. Using survey data from 384 participants, the research applies independent-samples t-tests, one-way ANOVA, correlation analysis, and a mediation model to explore the relationships among capital infusion, technology adoption, and business outcomes. Results indicate that women entrepreneurs who receive higher seed money demonstrate significantly more excellent entrepreneurial performance. Similarly, higher digital investments correlate with more vigorous growth, profitability, and market expansion. A moderate positive association between seed money and digital investment suggests that access to initial financial resources often motivates entrepreneurs to allocate more funds toward technological tools and platforms. Moreover, digital literacy partially mediates the impact of seed money on performance, underscoring the necessity of complementing financial capital with adequate digital skills. These findings highlight the multifaceted drivers of women’s entrepreneurship in Kerala and suggest that policies aimed at empowering women entrepreneurs should prioritize both capital support and digital capacity-building. By integrating these elements, development programs can create a more holistic ecosystem that fosters innovation, resilience, and long-term viability in the competitive SME sector.