Pre-Seed Fundraising in the UK - A Guide to Pre-Seed Fundraising for Start-Ups

What is pre-seed fundraising?
Pre-seed fundraising is a crucial step for many early-stage startups in the UK. It is the process of raising money from investors to help fund the development and launch of a new business or startup. 

What is the goal of pre-seed fundraising?
The goal of pre-seed fundraising is to secure enough capital to validate the business idea, build a minimum viable product, which would then enable you to attract additional investment (typically a pre-seed round is followed by a seed round). 

How do you raise pre-seed funding?
There are several sources to raise pre-seed funding in the UK. Here are a few examples:

• Friends & family:
  Sometimes called a "friends and family round" this is a first step for many entrepreneurs and typically involves raising money from those closest to you. This would provide very basic capital to build a basic MVP or launch your business. This typically means raising up to about £50,000 in exchange for equity shares in the business. 
  
  
• Angel investors:
  Angel investors are high net worth individuals who provide capital to early-stage companies in exchange for equity. Angel investors typically invest in companies that they have a personal interest in or a connection to. In the UK, there are many individual angels, as well as angel syndicates (which are groups of "angels" who pool their money and invest together. An angel investor, in the UK, would typically expect you to have SEIS assurance from HMRC, so they can take advantage of tax write-offs. 
  
  
• Crowdfunding:
  Crowdfunding platforms, such as Seedrs, allow startups to raise money from a large number of people over the internet. This can be a great way to raise awareness of your business and secure funding from a large number of people.
  
  
• Incubators and accelerators: Incubators and accelerators, such as Techstars provide mentorship, office space, and other resources to help startups get off the ground. They may also provide funding to the startups in their program.
  
  
• Government grants: The UK government offers a range of grants to businesses, particularly those in the technology or innovation sectors. These grants can help cover the costs of research and development, or help with the expansion of a business. UK Research & Innovation (formerly Innovate UK) and European Regional Development Fund are some of the government-funded programs that provide grants to businesses.

Do pre-seed investors expect my business to be SEIS accredited?
Typically, yes, pre-seed investors will expect you to be accredited by the SEIS and/or EIS schemes in the UK, which offer tax relief to individual investors that invest in small, early-stage companies.

Do I need a pitch deck?
One of the key elements of pre-seed fundraising is a pitch deck. A pitch deck is a visual presentation of your business that you can use to attract investors.

A well-crafted pitch deck should clearly and succinctly explain your business idea, target market, financial projections, and team.

It should also highlight your unique selling points and why your business is a good investment opportunity.

We'd recommend reaching out to see if we can help build your pitch deck so it stands out in the competitive fundraising environment.

Is it hard to raise pre-seed funding?
It's important to keep in mind that pre-seed fundraising can be a long and challenging process. It takes time to find the right investors, prepare a compelling pitch, and negotiate terms.

But with the right approach and persistence, it's possible to secure the funding you need to launch your business.

How can I find pre-seed investors?
A great starting point is out free PitchBuilder investor database.