Pre-seed

Pre-seed stage: You have an idea, maybe a prototype, but no real product or users yet. You need capital to quit your job, build the MVP, and prove the concept works. Pre-seed fills this gap before you're ready for seed funding. Pre-seed vs. seed: Pre-seed = idea → MVP → early validation. Seed = MVP → PMF → early traction. Pre-seed raises $50k-$500k at $1M-$4M valuation. Seed raises $500k-$2M at $4M-$10M valuation. Pre-seed is riskier, so valuations are lower. Who invests in pre-seed: (1) Angels—individual investors betting on founder + idea, (2) Friends and family—people who believe in you personally, (3) Micro VCs—small funds that write $50k-$250k checks (Hustle Fund, Afore Capital, First Round Fast), (4) Accelerators—YC, Techstars provide $25k-$150k for equity. Pre-seed requirements: You don't need traction, but you need: (1) Strong founding team—relevant experience or domain expertise, (2) Big market opportunity—$1B+ TAM, (3) Clear problem—pain point you're solving, (4) Differentiation—why your approach is better, (5) Ability to execute—prototype, customer interviews, early momentum. Pre-seed deal structure: Typically SAFE or convertible note—equity determined later at seed round. Pre-seed investors convert at a discount (10-20%) when you raise seed. Example: $500k SAFE with $3M valuation cap. At seed round ($1.5M at $8M post-money), pre-seed converts at $3M cap = 16.7% equity instead of 18.75% at seed price. Bootstrapping vs. pre-seed: If you can build the MVP yourself (side project, nights/weekends), bootstrap to validation before raising. If you need to quit your job or hire co-founders, pre-seed buys you runway. Neither is better—depends on your situation. Pre-seed challenges: (1) Hard to raise—most investors want traction first, (2) Small checks mean pitching 10-20 angels to close $200k, (3) Dilution—giving up 10-20% before you've built anything, (4) High failure rate—most pre-seed startups don't reach seed.

Notion raised $2M pre-seed from angels and small funds in 2013 before building their first product. Figma raised pre-seed from angels in 2012 to build their multiplayer design tool prototype. Both took 2+ years to launch publicly.