Pre-Seed Funding Guide: How to Raise Your First Round

Pre-seed is often the hardest round to raise.

You have limited traction, unproven product-market fit, and investors are betting almost entirely on you.

Here's how to do it right.

What is Pre-Seed?

Pre-seed is typically:

• Stage: Idea to early MVP
• Amount: $50K - $1M (typically $250-500K)
• Valuation: $2-8M
• Dilution: 10-20%
• Investors: Angels, micro-VCs, accelerators

Pre-Seed vs Seed

| Factor | Pre-Seed | Seed | |--------|----------|------| | Revenue | $0 - minimal | Some traction | | Product | Idea/MVP | Working product | | Team | 1-2 founders | Small team | | Raise size | $50K-1M | $1-4M | | Valuation | $2-8M | $8-20M | | Investors | Angels, micro-VCs | Seed funds |

Who Invests in Pre-Seed?

1. Friends & Family

First money often comes from your network.

Pros:

• Trust-based, fast decisions
• Flexible terms
• Emotional support

Cons:

• Limited capital
• Relationship risk
• Less strategic value

2. Angel Investors

Individual investors writing $10K-100K checks.

Where to find them:

• AngelList
• LinkedIn (search "angel investor")
• Local startup events
• University alumni networks
• Industry conferences

3. Micro-VCs / Pre-Seed Funds

Funds specifically focused on pre-seed.

Notable pre-seed funds:

• Precursor Ventures
• Hustle Fund
• Weekend Fund
• Contrary
• First Round's Angel Track

4. Accelerators

Programs that provide capital + mentorship.

Top accelerators:

• Y Combinator ($500K, 7% equity)
• Techstars ($120K, 6% equity)
• 500 Startups
• Antler
• Entrepreneur First

5. Founder Communities

Groups where founders invest in each other.

• South Park Commons
• On Deck
• Pioneer

How Much to Raise

The Calculation

Target Raise = Monthly Burn × 18-24 months

Example:

• Monthly burn: $25K
• Target runway: 18 months
• Raise: $450K (round to $500K)

Typical Pre-Seed Amounts

| Situation | Amount | |-----------|--------| | Solo founder, idea stage | $100-250K | | Team, MVP building | $250-500K | | Team, early traction | $500K-1M |

Don't Over-Raise

More money isn't always better:

• Higher dilution
• Higher expectations
• More pressure to scale quickly
• May skip learning phase

What Pre-Seed Investors Look For

1. Founders (60-70% of decision)

At pre-seed, investors bet on you:

• Domain expertise: Do you understand the problem deeply?
• Technical ability: Can you build the first version?
• Sales ability: Can you convince customers?
• Resilience: Will you push through the hard times?
• Coachability: Do you take feedback well?

2. Market (20-30%)

• Large enough opportunity ($1B+ TAM)
• Growing or undergoing disruption
• Timing is right (why now?)

3. Idea (10-20%)

Yes, the idea matters least at pre-seed. It will change.

What matters:

• Is it a real problem?
• Do you have a unique insight?
• Is there a path to defensibility?

Pre-Seed Pitch Deck

Keep It Simple (8-10 slides)

1. Problem: What pain exists?
2. Solution: How you solve it
3. Market: How big is the opportunity?
4. Why Now: What's changed?
5. Progress: What have you done?
6. Team: Why you?
7. Business Model: How you'll make money
8. Ask: What you're raising

What NOT to Include

• Detailed financial projections (you don't have data)
• Complex org charts (you're 2 people)
• Lengthy competitive analysis
• Vanity metrics without context

Pre-Seed Term Structures

SAFEs (Most Common)

Standard for pre-seed:

| Element | Typical Terms | |---------|---------------| | Amount | $25K - $250K per investor | | Cap | $3-8M | | Discount | 0-20% | | Type | Post-money SAFE |

Priced Rounds (Less Common)

Some investors prefer equity:

| Element | Typical Terms | |---------|---------------| | Valuation | $2-6M pre-money | | Dilution | 15-25% | | Option pool | 10% |

When to Use Which

SAFEs best for:

• Rolling closes
• Multiple small checks
• Speed
• Avoiding valuation negotiation

Priced round best for:

• Lead investor requires it
• Clean cap table preference
• Single large check

The Pre-Seed Timeline

Typical Duration: 2-4 months

| Phase | Duration | |-------|----------| | Preparation | 2-4 weeks | | Initial meetings | 2-4 weeks | | Follow-ups & commits | 2-4 weeks | | Closing | 1-2 weeks |

Week-by-Week Plan

Week 1-2:

• Finalize materials
• Build investor list (30-50 names)
• Start warm intro requests

Week 3-4:

• First meetings
• Refine pitch based on feedback
• Track everything in spreadsheet

Week 5-8:

• Second meetings with interested investors
• Push for commits
• Handle objections

Week 9-12:

• Close committed investors
• Send SAFEs
• Collect wires

Getting Your First Meeting

Warm Intros (Best)

1. Map your network to investors
2. Ask for specific intros
3. Make it easy to forward

Bad ask: "Can you introduce me to investors?"

Good ask: "I saw you know Sarah at Hustle Fund. She focuses on B2B marketplaces, which fits us perfectly. Would you be comfortable introducing us?"

Cold Outreach (Harder but Possible)

Keep it short:

Subject: [Your one-liner]

Hi [Name],

I'm building [company] - [one sentence description].

We're [one proof point].

Would love 15 minutes to share what we're doing.

[Your name]

Accelerator Applications

Structured path to funding:

• Apply to 5-10 programs
• Put effort into applications
• Prepare for interviews

Common Pre-Seed Mistakes

1. Raising Too Early

Wait until you have:

• Committed co-founder (if needed)
• Clear problem understanding
• Early customer conversations

2. Taking Bad Money

Avoid investors who:

• Have bad reputation
• Want control too early
• Don't understand your space
• Have misaligned expectations

3. Spending Too Long Fundraising

Set a deadline. If you can't raise in 3-4 months:

• Your story isn't compelling
• You're targeting wrong investors
• Market conditions are against you

4. Over-Optimizing Terms

At pre-seed, founder-friendly investors matter more than perfect terms.

After You Raise

Immediate Priorities

1. Thank your investors (they're on your team now)
2. Set up monthly investor updates
3. Start executing on your plan
4. Begin building relationships for next round

Investor Updates

Send monthly:

• Key metrics
• Progress highlights
• Challenges/asks
• Cash position

Calculate Your Raise

Use our tools:

• Equity Calculator - Understand ownership impact
• Dilution Simulator - Model future rounds
• Runway Calculator - Calculate how much you need

Key Takeaways

1. Investors bet on founders - your story matters most
2. SAFEs are standard - don't overcomplicate
3. Warm intros are best - but cold can work
4. 18 months runway - target goal
5. Speed matters - set deadlines and move fast

Related Reading:

• SAFE vs Convertible Note
• Seed Round Checklist
• Startup Valuation Methods