Your first pre-seed funding round: A founder's guide

Author: The Carta Team
Read time: 13 minutes
Published date: February 12, 2026

Learn what distinguishes pre-seed funding from other types of startup funding, including the different types of investors and typical round sizes for early-stage companies.

Contents

• What is pre-seed funding?
• Defining pre-seed
• What is pre-seed funding used for?
• Pre-seed vs. seed funding
• When are you ready for a pre-seed round?
• Who invests at the pre-seed stage?
• How to get pre-seed funding
• Common pre-seed fundraising mistakes to avoid
• Frequently asked questions about pre-seed funding

What is pre-seed funding?

Pre-seed funding is the earliest investment a startup receives. Startup funding is divided into rounds, which include seed, Series A, Series B, and so on. Pre-seed funding is any funding that comes before the seed round. Beyond that, there is not much consensus in the startup community as far as the definition of pre-seed funding.

While there's no single path, data from Carta's first-ever pre-seed fundraising report confirms that founders at this stage typically raise capital from friends and family, angel investors, and pre-seed venture capitalists (VC). This initial investment happens before a company has a finished product or any revenue, serving as the essential fuel to get a business off the ground. Timing has a huge impact on innovation, making the pre-seed stage a critical moment to get right. It’s a bet on you, the founder, and your vision for the future.

Defining pre-seed

Historically, Carta defined pre-seed funding as funding before a company’s first priced round. Most pre-seed funding comes in the form of convertible instruments, like Simple Agreements for Future Equity (SAFE). But some companies now raise early priced rounds, which they refer to as pre-seed.

Some definitions include angel investment and “friends and family” rounds under the umbrella of “pre-seed” investment, while other definitions separate these, defining only institutional money as pre-seed funding. Our goal is not to get lost in semantics, but instead provide robust resources for the type of funding available to early-stage startups, to ultimately help founders find the right investors. For that reason, this article will outline types of pre-seed funding, and ways to raise it, with the broadest possible scope.

What is pre-seed funding used for?

Pre-seed money is often used for early product development and company formation. Some examples of how companies may use pre-seed funding are:

• Company set-up, including incorporation, legal fees, and establishing basic tech stack
• Market research and customer identification
• Product development and finding a minimum viable product (MVP)
• Making key early hires and building your founding team
• Achieving early milestones to show traction before raising a seed round

Pre-seed vs. seed funding

It’s important to understand how pre-seed fits into the broader startup funding landscape. While the names are similar, the goals and expectations for pre-seed and seed funding are very different. Clarifying this distinction will help you set the right milestones and approach the right investors.

Thinking about these as distinct stages helps with strategic planning, which is especially important in a tough fundraising environment where valuations are down and the lines between rounds can sometimes blur. Pre-seed is about discovering the right questions to ask about your target market and product. Seed funding is about having found some of the answers and being ready to invest in growth.

The following table breaks down the key differences between a pre-seed and a seed round.

When are you ready for a pre-seed round?

So, how do you know it's the right time to seek pre-seed capital? While readiness is more about qualitative milestones than revenue, industry data shows that pre-seed is often the first institutional round for companies under two years old. Before you start fundraising, you should be able to confidently check off the following items.

• You have more than just an idea: Investors want to see tangible progress that shows your commitment and ability to execute. This could be a simple prototype, a detailed product mockup, or a minimum viable product built with no-code tools or through bootstrapping.
• You have validated the problem: You've conducted initial customer discovery interviews and can clearly articulate the pain point you're solving for a specific audience. You should have evidence that people want and need your solution, gathered from real conversations with potential users.
• You have a compelling story: At this stage, investors are backing you as much as your idea. You need a clear narrative about why you are the right person to solve this problem and why your team has the unique insight to succeed. This story connects your personal journey to the problem you're solving.
• You have a clear plan for the funds: You can explain exactly how you will use the investment to reach your next set of milestones. This isn't a complex financial model, but a simple roadmap that includes headcount planning to show you are a responsible steward of capital.

Who invests at the pre-seed stage?

Once you've decided you're ready to raise, the next question is: Who do you talk to? Pre-seed investors are a unique group because they are comfortable with the high risk and ambiguity that comes with backing an unproven idea. These are the first believers who provide the foundational capital for your journey.

Your pre-seed round will likely be funded by one or more of the following types of investors, some of whom may be non-accredited investors subject to federal investment limits. There are a number of sources of pre-seed funding available, depending on your company circumstances.

Friends and family

A friends-and-family funding round is when an early-stage startup raises initial capital from the personal network of the founders. This is often the very first source of capital for a new startup, coming from people in your personal network who believe in you. Friends-and-family investors are often betting on what they know about the founder rather than what they know about the vertical or industry.

Angel investors and syndicates

An angel investor is a wealthy individual who invests their own money into early-stage companies. They are often successful founders or experienced operators themselves and can provide invaluable mentorship and industry connections in addition to capital. This kind of support is often called smart money.

An angel syndicate is a group of angel investors who pool their capital to make a single, larger investment. These are often organized through a legal structure called a special purpose vehicle (SPV). For founders, raising from a syndicate can be an efficient way to fill a funding round while bringing on a group of supportive investors with diverse expertise.

Accelerators and incubators

Accelerators and incubators are fixed-term, cohort-based programs that can provide guidance, mentorship, and access to funding for startups in exchange for an equity stake in the company. Some accelerators and incubators make direct cash investments in the startups they support, while others connect founders to a powerful network of fellow founders and investors.

Crowdfunding

Equity crowdfunding is the process of collecting small contributions from many people, typically through online crowdfunding platforms. Some crowdfunding websites specialize in fundraising for businesses and can get the pitch out to a large group of general investors ( unaccredited investors included). Examples of crowdfunding sites include Republic, NetCapital, StartEngine, and WeFunder.

How to get pre-seed funding

Getting ready for your pre-seed round is about more than just having a good idea. It’s about building credibility and demonstrating professionalism from day one. This practical, step-by-step guide will help you get investor-ready.

Step 0: Preparing for funding

• Get to know fellow founders. Fundraising can be a long process. Having confidants and friends who “get it” can be invaluable.
• Know the fundraising market. Learn about the fundraising environment you're approaching, including current data and trends on valuation and round size for your stage and vertical.
• Network with potential investors before you raise. Set yourself up for success by building relationships with investors prior to fundraising.
• Apply for accelerators and incubators. These can be a great way for early-stage companies to find community, mentorship, and funding.

Step 1: Set up your cap table

Before you can sell a piece of your company, you need a single, accurate record of ownership. Relying on spreadsheets can lead to costly errors down the road. Using an equity management platform to manage their cap table from the start allows you to build a scalable foundation for growth with confidence.

Step 2: Develop your pitch and story

A compelling story is often more important than a detailed financial model. Your pitch should focus on the narrative behind your company, conveying the passion and conviction that drives you.

Step 3: Build your investor list

Don't send mass emails to every investor. Be strategic and research investors who have a track record of pre-seed investing in your industry. Seek warm introductions rather than going for a hard sell immediately.

Common pre-seed fundraising mistakes to avoid

• Not having a clean cap table: Managing your company's ownership on a spreadsheet can be risky and unprofessional.
• Stacking too many convertible instruments: Creates a messy and complex cap table.
• Giving away too much equity too early: Be mindful of share dilution from the very beginning.

Frequently asked questions about pre-seed funding

How much should you raise in a pre-seed round?

Aim to raise enough capital to give you a sufficient runway to hit key milestones for a successful seed round.

How long does a pre-seed round take?

Prepare for the fundraising process to take several months.

Can a solo founder raise a pre-seed round?

Yes, although it may be more challenging. A solo founder with deep expertise and tangible progress can succeed in raising a pre-seed round.