Pre-seed funding is the first money a startup raises from outside investors, usually before there is a finished product or steady revenue. Its job is to get you from an idea that is starting to work to clear proof that people want it.
If you are thinking about raising for the first time, this guide covers what pre-seed funding is for, where it comes from and what investors look for.
What pre-seed funding is for
At pre-seed you’re not raising money to scale. You’re raising it to learn fast. Most founders use it to:
- build or finish a first version of the product
- get it in front of early customers
- prove one thing that matters, such as people paying, coming back or joining a waitlist
A good round has a clear finish line. Before you raise, write down the milestone the money gets you to. It might be your first ten paying customers, a working pilot or a product people use every week.
How much do founders raise at pre-seed?
It varies a lot by country, sector and how much the product costs to build. Some founders raise a few thousand to test an idea, while hardware or regulated products need much more. At Getfund-startup we write first cheques of $5k to $50k.
The right number is the amount that gets you to your next milestone, plus a buffer for things taking longer than planned. Raising far more than you need can mean giving away more of your company than you have to. We cover this in how much to raise at pre-seed.
Who invests at pre-seed?
- Founders’ own savings, friends and family
- Angel investors, who invest their own money
- Pre-seed funds like us, which back several early companies a year
- Accelerators, which usually invest a small amount alongside a programme
- Grants and competitions, which don’t take equity but often come with conditions
Many founders combine a few of these.
What investors look for before a first cheque
There is little data at this stage, so investors focus on a few things:
- The team. Why are you the right people to build this? Relevant experience, and the fact that you’re already building, count for a lot.
- The problem. Is it real, and do people have it today?
- Early signs of demand. Users, pilots, a waitlist, letters of intent or first revenue.
- A clear plan for the money. Specific milestones, not vague growth.
We judge every application on four questions: is it relevant, marketable, scalable and sellable? Our guide to what investors look for goes into more detail.
What you give in return
Most pre-seed investors take equity, which is a share of your company. Some use agreements that turn into shares later, at your next funding round. Terms vary, so read them carefully and get advice if you are unsure. A good investor will happily explain what they are offering and why.
Are you ready to raise?
You’re probably ready if you can explain the problem in a sentence, show that some people want what you’re building and say exactly what the money will get you to. You don’t need a polished deck.
If that sounds like you, apply for funding with us. If you’re not quite there, save your spot and finish your application when you’re ready.
