Vermiculite is a natural mica-like product that is heated to make it more useful. It has the ability to absorb water and nutrients and hold them for roots to use. It also creates pore space in a seed-starting mix, which allows air (oxygen) to get down to roots. And it makes the soil "lighter" so that tiny roots can penetrate it easily. Here is a good explanation about it and also perlite, a common seed-starter ingredient: http://extension.umd.edu/sites/default/files/_images/programs/hgic/Publications/HG42_Soil_Amendments... See page 6 for potting mixes.
You'll want to use between 30-50% vermiculite. Most of the rest is usually peat moss. Here are some "recipe" options: http://articles.extension.org/pages/20982/organic-potting-mix-basics