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Pre-Seed Funding + A List of the TOP 20 Pre-Seed Funds

Pre-seed funds have exploded in popularity.

We’ll list out over 20 of the most active and best pre-seed funds below - click here to jump to the list.

We also list out recent pre-seed round valuations (and seed round valuations), dig into how big most of these financing rounds are, and give you some tips we’ve seen our clients successfully use to raise pre-seed, and seed, funding in today’s environment.

Who Provides This Type of Funding

There are several, common type of investors that founders use to raise pre-seed funding. This is a difficult round to raise, so we often see many founders raise from different investor types, sometimes at different moments.

Angel investors

  • Angel investors are individuals who make relatively small investments, typically $25,000 to $100,000. Many founders reach out to friends and family - remember to be careful taking money from people close to you; taking on capital from people who are not aware of the high risks of the pre-seed stage may be an issue!
  • They are often the sole decision makers, so you can usually secure pre-seed money quickly from angel investors.
  • If they have already invested in your business in a previous round, they will already be invested in the success of your venture.
  • The best angel investors can make introductions in your industry; many of our top founders reach out to CEOs and founders in their space to raise this round and find angel investors. 

Accelerator or incubator programs

  • Accelerator or incubator programs are like startup crash courses.
  • Early-stage companies not only raise initial pre-seed capital (typically around $125,000), but they also gain access to an entrepreneurial community, helpful training, networking opportunities, free or discounted resources, and exposure to top-notch VCs for future funding rounds.
  • Founders must go through an application process and, if accepted, follow the guidelines to complete the program.
  • Not all programs are created equal - make sure you talk with founders who have already gone through the program before joining!

Pre-seed and seed investment venture capital funds

  • Pre-seed and seed investment venture capital funds represent multiple limited partner investors.
  • VC funds can offer larger investments during pre-seed rounds, but they also often have longer decision-making process.
  • The amount of traction they like to see varies, so do some research before you outreach. 

20+ Best Pre-SEED Venture Capital Funds

We are labeling these “venture capital funds” since they function as VC funds - a partnership raises capital from outside investors (“LPs”), and typically charges those investors the same rates that VCs charge their LPs. This list of pre-seed funds is based on the investors we see actively investing in the clients that we service.

  • Pear.vc
  • Precursor
  • First Round Capital
  • Susa Ventures
  • Launch Capital
  • Alumni Ventures (and their affiliated, school-focused funds)
  • Slow Ventures
  • Initialized Capital
  • Union Labs
  • Notation Capital
  • Haystack
  • K9 Ventures
  • Founder Collective
  • Maven Ventures
  • Start Fund
  • SOSV
  • Right Side Capital
  • Village Global
  • Neo Accelerator
  • Afore Capital
  • Sequoia Arc
  • 2048 Ventures
  • Operate Studio
  • 43 (Dustin Dolginow’s pre-seed fund)
  • Betaworks Ventures
  • boldstart VC

When is a Startup Ready for Pre-Seed Funding?

Every industry will have specific milestones on when professional pre-seed funds are ready to make an investment. And other important variables may make it easier for a younger company to raise pre-seed funding - such as an experienced team, pre-existing/strong relationships with funding sources, hot hot markets, etc. However, there are a few KPIs that we can broadly generalize to that help founders know that pre-seed funding from professional investors may be an option: 

  • MVP: if your startup has a Minimum Viable Product that is being embraced by the target customer, you’ve got an edge when it comes to raising this type of capital. That’s not to say that you can’t raise without and MVP, but it sure helps. If you don’t yet have a product:
  • Crystalized product vision and market need: you’ve already talked to potential customers, and several have said that they are willing to start paying for the product as soon as you have it ready/built. The more “firm” these promises to pay are, the better vis a vis getting capital raised.
  • Revenue: going the other direction from a not yet developed product to actual paying customers! If you have paying customers and are growing revenue from a small base by 50%+ month over month you are likely to be exciting from an investment standpoint. 
  • Team Team Team: an experienced team will always make it easier to raise; some funds like Notion love to find small teams with ideas and provide light amounts of capital to get the ball rolling
  • Strong hires lined up: perhaps the most difficult “metric” to raise off of, but if you have experienced industry veterans ready to come on full time you MAY be able to raise pre-seed funding. However, keep in mind some investors may ask “why isn’t that person willing to work nights and weekends on the idea for free if it’s such a great concept?”

What to Pitch When Talking to Pre-SEED Investors

We’ve written extensively about what goes into a VC pitch deck - the concept is the same for founders raising pre-seed funds.

  • Industry problem
  • Your solution of unique value proposition
  • Market size
  • Go to market strategy (how you’ll sell or marketing into the industry
  • Competition, or what the existing solution is that customers are using to solve the problem
  • Business model - high level projections on how big you can get, how much it will cost to get there. More granular on what you’ll use with the pre-seed funds: you want to prove that you’ll spend the money to produce a company that can raise a real seed round.
  • The team

Check our our pitch deck piece to get more detail and more ideas on what you can include. We’ve also published a startup pitch deck course that goes into great detail into each slide in the deck. 

Did you just raise funding? Congrats! Now you have professional investors who expect professional financial statements. Check out our low-cost, high-quality bookkeeping service pricing for funded startups.

What do Pre-Seed Investors Look for in a Startup?

By definition, a company pitching for pre-seed funding is very early-stage. So what does an investor look for in a startup to determine if investing is a good idea?

An interview with a well known pre-seed investor, Charles Hudson discusses what he looks for. Answering the question “what do you look for - what is it that gets your attention,” he said:

“It’s a really interesting question. The only thing that I can focus on is that person’s articulation of the idea. And what is it that they’ve understood or learned about the problem that they are trying to solve that feels novel, special or unique… for me it’s can the person tell me a really good story about the market opportunity that they are going after and why they are uniquely suited for going after it. And a lot of times… we have people who are mid-level manager or director level at a startup and have build a tool internally or saw some problem repeatedly in their own company and decided that they want to go solve that for a bigger audience. Other times we have people who are maybe employee 1,000 at a company that’s gone on to be really successful… and they’ve learned a ton about some aspect of the business that they want to solve. And my view is that the people I meet who can tell me a good story and get me excited can do the same for customers, investors and employees… and $500k to one million can solve one of the big, unopened questions about the business.”

It’s a great interview with a leading investor at this stage - listen here

How Big are Most Pre-Seed Rounds?

The average amount of capital raised in a pre-seed round is typically $100,000 to $1,000,000 - although CrunchBase reports pre-seed capital raises of up to $7.3 million in the first three months of 2021. 

Most of our clients who raise this type of capital raise under $2,000,000, with this round of financing being a bridge until they can raise a larger seed round. And seed rounds have became quite large in 2021; we saw a number of seed rounds raising $10 million or more in capital. This has moderated somewhat in 2022, but there are still companies raising $5M+ seed rounds, usually off the backs of $2M+ pre-seed rounds.

How much pre-seed funding should a startup raise?

Most of these capital raises are $100k to $1M in size, but the “correct” amount of capital to raise in a pre-seed round depends on how much capital the startup needs to achieve the milestones to successfully raise a seed funding round. An MVP, revenue traction, strong customer logos, proof of concept from a scientific perspective - these are all good milestones to shoot for with the pre-seed round.

How much equity do you sell in a pre-seed round?

We see most startups selling 10% to 20% of their equity in a priced round. However, many startups - especially ones with second-time founders - negotiate a SAFE or convertible note round with around a 30% discount. These rounds, if done with a convertible security, often have a more aggressive discount rate since company is usually closer to ‘slideware’ than an actual operating business. 

How to Meet Pre-Seed Investors

The first step in how to get pre-seed funding is to get in contact with possible investors. Meeting pre-seed investors can be daunting, especially if you are looking for pre-revenue investors. We’ve worked with hundreds of founders who have successfully found very early-stage investors. Here are some of the strategies that they’ve used:

  • Networking - networking through trusted contacts into investors is the highest probability way to get a first meeting. However, it’s not easy if your startup is not based in an area where there already are a lot of investors, or if you are new to the startup landscape. If you already know other founders who have raised angel or seed financing, get them excited about your idea and then ask them for introductions. If you don’t already know CEOs who have raised money, ask them for advice! Many founders are open to mentoring and meeting with exciting startup founders. 
  • Friends and family - again, this assumes you have a network of friends and family with money to burn. 
  • Cold emailing - this method works surprisingly well, but it takes time because it’s 1) a volume game and 2) you need to personalize every email. Keep the email tight, supply some traction or other exciting statistics, and link out to a way for the investor to learn more and get excited.
  • Lawyers, bankers and accountants - service providers do make introductions. That’s where choosing to work with lawyers, accountants and banks that are in the startup ecosystem really helps.

See some other tips on how to raise angel funding here.

Why to Pre-Seed and Seed Investors Care So Much About Pro Rata Rights?

Pro rata rights are a big deal for seed-stage investors and founders. These rights let an investor keep putting money in during future rounds, helping them maintain their initial ownership percentage in the business. In all follow on rounds, pro rata rights let them keep investing to maintain ownership, and super pro rata rights let them invest even more. 

Let’s go over why these rights are so important to your earliest investors - and understand how they impact future investors as well. 

Impact of Pro Rata on Seed Investors

Professional, early-stage investors want to double down on their winners. They invest, learn about how good the team and company is, then want to maintain or increase their ownership percentages in their investments that are doing the best. Being blocked from investing more in future rounds is a big problem. Without pro rata rights, they’ll face a lot of dilution as the company raises more capital.

Pro Rata Makes a Difference

For founders, remember, taking money from seed stage investors involves a complex relationship. Professional early-stage investors are going to insist on getting pro rata rights. However, the lead investors in subsequent rounds will have ownership targets that they want to hit, and a ton of pro rata rights will make it harder for these new investors to put in enough money. 

How to Get Early Investor Commits

Sometimes a founder will find the right lead investor for their seed or pre-seed round right away. Other times, getting funding commitments is a long battle that involves conversations with multiple groups over a long period of time.

There are two common strategies to get investors to commit, sign and wire seed and pre-seed funding (seed extension funding as well!). Founders use these strategies when they are raising a convertible security, like a SAFE or Convertible Note; these strategies are not usually used when raising a ‘priced’ round with Preferred Stock. The two strategies are: Progressive Caps or a Soft Commits.

Progressive Caps vs Soft Commits in an early-round

With a progressive cap strategy, the founder sets a series of progressively higher valuation caps on their SAFE/Convert. The first investors to sign and wire their investment get the lowest cap, until all that security is taken. Then the next investors get the subsequent caps. 

For example, the founder will state that they are raising $500k at a $4M cap, then $500k at a $5m cap, then $500k at a $6M cap. As each amount is filled, investors coming in get the higher cap, until the round is closed. This creates a sense of urgency through scarcity, meaning that investors are more likely move so that they get the more desirable tranche. The biggest issue with this fundraising strategy, especially in a difficult funding environment, is that investors may be afraid to be part of the first commitment, since the subsequent dollars may not arrive. this leaves them as an investors in a pre-seed company that failed to fill out it’s round and that may not have enough capital to achieve the goals it needs to hit to raise a seed round!

For a Soft Commit strategy, the founder gets investors to provide “soft commits,”, i.e. asking the investors how much they want to invest at a reasonable cap/valuation. Then the founder meets with many investors to pencil in the round. In an ideal scenario, the founder finds an investor near the end of the process who sets the pricing/cap. Then the founder has to go and tell all of the committed investors what the terms are, and get them to sign and wire. This strategy can be slower/take longer to get funding into the company. However, in a tough funding environment, it can be a higher probability method of raising a round, to the extent that your startup remains attractive and that investors who soft committed were serious. 

What To Do Right After You Raise Pre-Seed Funding

If you are successful raising pre-seed funding, it’s time to set up the infrastructure for your startup’s finances.

You’ll need a place to keep the cash that you’ve raised, an accounting system to keep track of your finances, a payroll system to pay you and your first employees, a corporate card (not a personal one!) to pay expenses, and more. Here are the steps you need to take after you’ve raised pre-seed funding:

  • Corporate bank account - pick a bank that knows startups; you don’t need your banker freaking out that your business isn’t generating enough revenue to cover your costs - you aren’t a coffee shop!
  • Company Credit Card - the biggest thing is that you want a card with NO personal liability transferred to the founders. Startups go under all the time, especially pre-seed funded ones. You don’t want to go bankrupt if your startup fails.
  • Payroll - don’t mess around if you are paying employees. The IRS wants their payroll taxes; mess this up and you can actually go to jail! (And you don’t pass go and get an extra $200 in pre-seed funding!)
  • Get an Accountant
  • Get Quickbooks - this is the best accounting software for funded companies in the USA
  • Financial projections - know when you are running out of cash, and keep track of your progress against your financial goals and cash position
  • Immediately begin writing investor updates every month

Do Pre-Seed and Seed Funds Invest in LLCs?

Generally, no, Silicon Valley investment funds like seed or pre-seed funds do not typically invest in LLCs. DE corporations are by far the most common corporate structure that professional, early-stage investors choose to fund - and for good reason. 

First, C-corporations have a more standardized governance structure, tax treatment, and the ability to issue preferred stock, which can come with additional rights and protections for investors vs. LLCs. Second, many venture-backed corporations are incorporated in Delaware, for legal reasons. The case law in litigation in Delaware is very well-known and understood. It’s a business-friendly state where everyone knows the rules, making it easier for both companies and investors to understand their legal standing. You know how to play by those rules, and you know if you’re at risk of being sued. Therefore, VCs also like the legal structure and the legal rules in Delaware.

LLCs have a more flexible structure and governance, making it more complicated to define investor rights and responsibilities. Additionally, the tax implications for LLCs can be more complex for investors, especially those that are tax-exempt or based outside the United States. The tax issues alone are enough of a problem to prevent most VCs from wanting to invest in LLCs. Some venture capital funds may even have restrictions against investing in LLCs outlined in their Limited Partnership Agreements.

That said, there are investment funds that do invest in LLCs, especially those focused on industries or sectors where LLCs are common, or those that specialize in earlier-stage or smaller investments where the LLC structure may be more prevalent. If you have an LLC and are looking for investment, it’s crucial to discuss the matter with legal and financial advisors to understand the implications. You may also consider converting your LLC to a corporation to broaden your options for investment.

Written by Experienced Pre-Seed and Seed Investors

The authors of this post have collectively invested in 80+ startups, many at the pre-seed and seed rounds. They have invested in SAFEs, Converts, price rounds; have been on cap tables of SaaS companies, crypto startups, cleantech companies, marketplaces, and more. 

Healy Jones was a venture capitalist with Atlas Venture and Summit Partners. After his time as an investor, he joined a series of startups that raised VC funding, including one that went public. He has also founded a bootstrapped company that he successfully exited. At Kruze, he advises startup founders on their financing strategy.

Healy Jones blends his venture capital experience with operational knowledge to support startup financial strategies. With a background in investing in over 50 startups and holding executive roles in VC-backed companies, Healy has been featured in major publications like the New York Times, Wall Street Journal, and TechCrunch. His efforts at Kruze have been crucial in helping startups collectively secure over $1 billion in VC funding, showcasing his ability to effectively navigate financial challenges and support startup growth.

Scott Orn, CFA, was an investor with Lighthouse Capital, where he invested in well known companies such as AngiesList, Upwork and Impossible Foods. At Kruze he advises startups on their financing strategy with a particular focus on the seed and Series A rounds, and also on venture debt raises.

Scott Orn leverages his extensive venture capital experience from Lighthouse Capital and Hambrecht & Quist. With a track record of over 100 investments ranging from seed to Series A and beyond in startups, including notable deals with Angie’s List and Impossible Foods, Scott brings invaluable insights into financing strategies for emerging companies. His strategic role in scaling Kruze Consulting across major U.S. startup hubs underscores his expertise in guiding startups through complex financial landscapes.

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