What is a pre-seed round?
A pre-seed round, in the context of startup financing, refers to the initial stage of fundraising that occurs before a startup seeks formal external investment from venture capitalists or angel investors. This round is typically focused on securing the initial capital needed to develop and validate the startup's concept or product, often when the company is still in its very early stages of formation.
During the pre-seed round, founders often tap into their personal savings or obtain small investments from friends, family members, or close contacts. These initial funds are used to cover basic expenses such as product development, market research, initial marketing efforts, and other foundational activities necessary to bring the startup's idea to a more advanced stage.
Pre-seed funding is essential for startups to reach a point where they can demonstrate their concept's viability and attract more significant investment in later rounds, such as seed funding and Series A funding. The goal of the pre-seed round is to prove the business concept, build a minimum viable product (MVP), gather user feedback, and establish some traction that can be presented to potential investors in subsequent rounds.
Investors participating in pre-seed rounds understand that these early-stage companies are higher risk due to the uncertainties surrounding their business models, markets, and products. In return for their investments, pre-seed investors often receive equity in the startup, and their contributions can vary from a few thousand dollars to tens of thousands of dollars, depending on the startup's needs and the investor's appetite for risk.
Overall, pre-seed rounds play a crucial role in the startup ecosystem by providing the initial fuel necessary for young companies to begin their journey and progress to a stage where they can attract larger investments and achieve more significant milestones.
What is the average pre-seed round amount?
According to our database of 2,269 pre seed funding rounds from 2014 to the present the average pre seed round is $1,234,564.71, so about $1.2 million.
What companies in the US are in the pre seed stage now?
Fear not dear reader! The companies listed below are pre seed startups in that their latest funding round, according to public web records, was a pre seed round.