Pre-Seed Funding: Guide for Early-Stage Startup Founders
Your first pre-seed funding round: A founder's guide
Author: The Carta Team
Read time: 13 minutes
Published date: 12 February 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.
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 a mix of 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.
At this funding stage, investors are looking for signals that you have a deep understanding of the problem you're trying to solve. They want to see your passion, your unique expertise, and your resilience in the face of early challenges. Your ability to articulate a clear vision is more valuable than any financial projection.
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.
The following table breaks down the key differences between a pre-seed and a seed round.
| Pre-seed round | Seed round | |
| Primary goal | Validate the problem and solution | Achieve product-market fit and scale |
| Company stage | Idea, prototype, or early MVP | Working product with early traction |
| Focus | Building the initial product and team | Growing the user base and revenue |
| Typical investors | Friends and family, angel investors, accelerators | Angel investors, seed-stage VCs |
| Typical amount raised | Typically a few hundred thousand dollars (e.g., ~$250,000 to $1 million), though some rounds are smaller or larger | $500,000 to $5 million |
| Priced or convertible | Convertible | Either |
| Equity issued | SAFEs or convertible notes | SAFEs, convertible notes or preferred stock |
| Use of funds | To test your idea | To gain early traction and start selling |
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.
- 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 have a compelling story: At this stage, investors are backing you as much as your idea.
- 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.
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.
Your pre-seed round will likely be funded by one or more of the following types of investors:
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.
Angel investors and syndicates
An angel investor is a wealthy individual who invests their own money into early-stage companies. Angel syndicates are a group of angel investors who pool their capital to make a single, larger investment.
Accelerators and incubators
Accelerators and incubators provide guidance, mentorship, and access to funding for startups in exchange for an equity stake in the company.
Crowdfunding
Equity crowdfunding is the process of collecting small contributions from many people, typically through online crowdfunding platforms.
How to get pre-seed funding
Step 0: Preparing for funding
- Get to know fellow founders. Fundraising can be a long, rollercoaster-like process.
- Know the fundraising market. Study the data and trends on valuation and round size for your stage and vertical.
- Network with potential investors before you raise. Start building relationships early.
- Apply for accelerators and incubators. These programs 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 who owns what. This record is your cap table, and it is the non-negotiable foundation of any fundraise.
Step 2: Develop your pitch and story
At the pre-seed stage, a compelling story is often more important than a detailed financial model. Your pitch should focus on the narrative behind your company.
Step 3: Build your investor list
Be strategic. Research and target investors who have a track record of pre-seed investing in your industry.
Common pre-seed fundraising mistakes to avoid
- Not having a clean cap table
- Stacking too many convertible instruments
- Giving away too much equity too early
Frequently asked questions about pre-seed funding
How much should you raise in a pre-seed round?
You should aim to raise enough capital to give you a sufficient runway to hit the key milestones needed to raise a successful seed round.
How long does a pre-seed round take?
You should be prepared for the fundraising process to take several months.
Can a solo founder raise a pre-seed round?
Yes, it is possible, although many investors prefer to see a founding team of at least two co-founders.
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