Pre-seed
pree-seed
The earliest stage of startup funding, typically $100K-$1M from angels or small funds to build the initial prototype.
Pre-seed is the earliest fundraising stage. It happens before the seed round, often before the product exists. Pre-seed rounds are typically $100K to $1M and come from angel investors, pre-seed funds, or accelerator programs like Y Combinator.
At pre-seed, the startup might only have a deck, a prototype, or a technical proof of concept. The capital funds the founders for 6-12 months to build the first version of the product and validate initial demand.
Pre-seed was not always a distinct stage. It emerged as seed rounds got larger and the gap between bootstrapping and raising a $3M seed became too wide for many founders to cross without intermediate capital. Most pre-seed rounds use SAFE notes for simplicity.
Examples
A technical founder raises a pre-seed round.
The founder has a working prototype and three LOIs from potential customers. They raise $500K from a pre-seed fund and two angel investors using a SAFE note. The capital funds 9 months of full-time development and initial customer acquisition.
An accelerator provides pre-seed capital.
Y Combinator invests $500K for 7% equity. The 3-month program provides mentorship, office space, and a network. At the end, the startup has a product, initial customers, and is ready to raise a full seed round.
A pre-seed round uses SAFEs instead of priced equity.
The founders raise $300K across five angel investors using SAFE notes with a $6M valuation cap. SAFEs are simpler and faster than priced rounds. The investors convert to equity at the next priced round.
In practice
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Frequently asked questions
What is the difference between pre-seed and seed?
Pre-seed typically comes before the product exists or is in very early stages ($100K-$1M). Seed comes when the product exists and the company is seeking product-market fit ($1M-$5M). The line between them is blurry and varies by market.
Do you need revenue to raise a pre-seed round?
Usually not. Pre-seed investors fund the idea and the team. Some evidence of demand helps (waitlist signups, LOIs, prototype feedback) but revenue is not expected. If you have revenue, you are likely ready for a seed round.
Related terms
The first significant round of funding for a startup, typically raising $1-5M to validate the product and find initial customers.
A high-net-worth individual who invests their personal money in early-stage startups in exchange for equity.
A simple investment instrument created by Y Combinator that converts to equity at the next priced funding round.
A form of short-term debt that converts into equity at the next priced funding round, often used in early-stage fundraising.
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