What is Pre-Seed Funding?
Pre-seed funding refers to the initial capital raised by startups to support the early stages of product development, market research, and prototype creation. It's the foundational financial fuel before a startup becomes operational or gains significant customer traction.
Differences Between Funding Stages
Pre-Seed Funding: Targets idea validation and MVP development, with capital usually coming from personal savings, friends, family, and angel investors.
Seed Funding: Aims to support early market entry and product refinement, attracting more angel investors and early-stage VCs.
- Series A Funding: For startups ready to scale, focusing on optimising products and expanding market reach, funded by venture capital firms.
Types of Pre-Seed Investors
Angel Investors: Wealthy individuals investing in exchange for equity or convertible debt.
Angel Investor Syndicates: Groups of angel investors pooling resources to invest in startups, often led by a seasoned investor.
Incubators and Accelerators: Programs offering seed investments, mentorship, and resources in exchange for equity.
Early-Stage Venture Capital (VC) Funds: VC firms focusing on early-stage investments, providing capital for startups showing significant potential.
Friends and Family: Personal connections offering flexible, early support.
Finding Pre-Seed Investors in the UK
Identifying suitable investors is crucial. We'd recommend checking out our UK investor list, that has details on more than 350+ UK investors, including those who invest at pre-seed and seed stage.
SEIS / EIS: Incentivising Investments in UK Startups
The UK's Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS) offer tax reliefs to investors, enhancing the appeal of investing in early-stage companies.
SEIS offers up to 50% tax relief on investments up to £100,000, targeting very early-stage companies.
- EIS provides 30% tax relief for investments up to £1,000,000, aimed at more developed startups.
What Do I Need to Pitch Pre-Seed Investors?
- Pitch Deck: A concise, engaging presentation outlining your business idea, market opportunity, business model, team, and financial projections. It's your first impression and must capture the essence and potential of your startup effectively. We'd suggest downloading one of our templates, following the Sequoia model, or hiring us to help build a compelling pitch deck.