A startup with a great business concept wants to get up and run as soon as possible. The firm has grown thanks gradually to the generosity of friends, family, and the founders’ own financial resources, from humble beginnings to proving the quality of its concept and goods. With time, the company’s client base expands, and the company’s activities and goals broaden. Soon after, the firm had climbed through the ranks of its rivals to become highly valued, opening the door to further development, including additional offices, staff, and possibly an IPO (IPO).
Pre-Seed Funding and Angel Investors
Individuals who aim to invest in businesses in their earliest stages are known as angel investors. These high-risk investments usually make up less than 10% of an angel investor’s overall portfolio. The majority of angel investors have excess capital and are looking for a higher rate of return than traditional investment options can provide.
Seed money is the first acknowledged stage in equity fundraising. It is often the first official money raised by a business venture or corporation. Some businesses never progress beyond seed investment to Series A or beyond. The “seed” investment may be compared to the process of planting a tree. There are numerous potential investors in a seed fundraising situation, including entrepreneurs, friends, family, incubators, venture capital companies, and others.
What is Pre-Seed Funding?
Pre-seed funding is the first round of investment for a new business (albeit it’s not always regarded as an ‘official’ round. It gives enough equity to get a business off the ground and is often used to build an early version of a product that can later be used to attract further funds.
How does Pre-Seed Funding Work?
It’s vital to identify the various players before examining how a fundraising round works. Others are searching for funding to expand their firm. A company’s fundraising stages evolve as it grows; it’s common for a company to start with a seed round and then proceed through A, B, and C capital rounds. On the other hand, there are potential investors.
While investors want businesses to succeed because they believe in the company’s aims and causes, they also want a return on their investment. As a result, almost every investment made at one or more phases of development funding is structured so that the investor or investing corporation owns a company’s share. The investor will be reimbursed in proportion to his or her investment if the firm thrives and earns a profit.
Why Do Companies Need Pre-Seed Funding?
A startup begins with a disruptive concept. However, not every company concept becomes a reality. During the course, some are abandoned, while others fail. However, an entrepreneur must verify a startup concept in order to ensure that it can turn into a viable firm. This validation frequently necessitates a financial contribution from the startup.
This is when pre-seed funding comes into play. When startups need to fund their validation processes, they raise pre-seed money. They perform tests based on predetermined assumptions to validate their service, market, value, or problem. A hypothesis is made up of assumptions and success criteria concerning the problem they’re trying to address.
When Should Startups Raise Pre-Seed Funding?
Employees must be employed, offices must be rented, and equipment must be acquired. More importantly, they must grow. Companies will almost always require outside funding to complete these objectives. The term “seed money” refers to a company’s first round of fundraising. This fast guide highlights everything startup founders need to know about getting seed money to get their company off the ground.
This is not meant to be a comprehensive fundraising guide. It merely covers the fundamentals that most entrepreneurs will require. The material is based on my experiences at Y Combinator and Imagine K12, where companies invest in businesses and advise entrepreneurs.
Key Differences Between Pre-Seed Funding and Seed Funding
The pre-purpose seeds are to show that your product meets market demand. The seed round, on the other hand, is funded to demonstrate product-market fit. To be more detailed: The pre-seed or post-ideation investment round is for early-stage product development, basically preparing the firm to optimize future fundraising prospects by forming and testing a cohesive, effective core team and creating an MVP that goes beyond a prototype.
Companies in the seed fundraising round, on the other hand, are anticipated to have already verified their value proposition, and it is during this stage that the firm builds the levers that will determine how their business would eventually grow via a venture capital injection.
Family, friends, and other angel investors who like working with fledgling enterprises often provide seed capital. Venture capitalists focus on up-and-coming firms with items they believe will sell for early-stage funding.
Pre-Seed Angel Investors
Angel investors provide better conditions; traditional lenders are less concerned with the entrepreneur’s capacity to establish a business than with the enterprise’s long-term viability. Angel investors are more interested in supporting enterprises in the early phases of development than in profiting from them. Venture capitalists are the polar opposites of angel investors.
The initial investment round in a new company happens so early in the process that it isn’t normally included in the fundraising rounds. This stage is also known as “pre-seed” funding, and it refers to the period when a company’s founders are just getting things started. The most common “pre-seed” financiers are the founders, as well as close friends, fans, and family.
What are Angel Investors?
An angel investor is a person who invests in a firm or a business startup in exchange for convertible debt or stock in the company. Angel investors typically fund start-ups in their early stages, when most other investors are hesitant to back them. A high-net-worth individual who finances enterprises in their early stages, frequently with their own money, is known as an angel investor.
How do Angel Investors Invest in Any Company?
Individuals who invest funds in businesses in exchange for ownership equity or convertible debt are known as angel investors. Some angel investors pool their funds through online crowdfunding platforms or by forming angel investor networks.
- They look for equity ownership
- Bring money as well as expertise to grow
- Invest less than $100,000
- They want a strong team with big ideas
- They want better financial projection
- Do not want early-stage development and research
50 Top Pre-Seed Angel Investors
Many angel investors are investing huge capital in startups, and these pre-seed angel investors support the budding new entrepreneurs and their ideas. Here is the list of the top 50 pre-seed angel investors.
|Name||Operating location||Active Investments||Investment Range||Industry|
|Aaron Vinson||US||13||$5K to $100K||Consumer Internet, Enterprise Software, Mobile, Healthcare, SaaS, Finance|
|Adam Rothenberg||US||249||$250K - $500K||Consumer Internet, Healthcare, SaaS, Social media|
|Alex Iskold||US||105||$300K - $600K||AI, Biotech, SAAS, Data|
|Alexander Koelpin||Germany||19||$100K - $1M||Consumer Internet, Healthcare, SaaS, Social media, Fintech|
|Anamitra Banerji||US||15||$300K - $1.2M||AI, Biotech, SAAS, Data, Deeptech, Crypto|
|Beth Turner||US||9||$100K - $500K||AI, Biotech, SAAS, Data, Deeptech, Crypto|
|Cat Hernandez||US||10||$100K - $10.0M||Education, Crypto, Internet, Food and Beverage, Health|
|Caterina Fake||US||34||$30K - $1.5M||Consumer Internet, Entreprise|
|Charles Hudson||US||10||$250-500K||Consumer Internet, Hardware, AI, Messaging, Technology|
|Chuck Pettid||US||30||$25K - $50K||Clean tech, Deep tech, Consumer internet, Cloud infra, Fintech|
|Cyan Banister||US||93||$100K - $1M||AI, Consumer Internet, Enterprise, FinTech, Future of Work|
|David Rodriguez||US||30||$250K - $500K||AI, Analytics, E-commerce, Enterprise, FinTech|
|David Tisch||US||296||$250K — $500K||Cloud Infrastructure, Consumer Internet, AI, Analytics, E-commerce|
|Dele Akinyemi||UK||50||$1M - $27.0M||AI, Analytics, Cloud Infrastructure, Consumer Internet|
|Dmitry Alimov||US||33||$100K - $5.0M||AI, Consumer Internet, Enterprise, FinTech, Future of Work|
|Elaine Wherry||US||20||$100K — $1M||Consumer Internet, Enterprise|
|Evan Tana||US||14||$500K - $1M||Consumer Internet, Healthcare, SaaS, Social media|
|Gigi Levy-Weiss||US||102||$500K — $5M||AI, AR/VR, Cybersecurity, SaaS|
|Guy Gamzu||US||20||$100K - $1M||Consumer Internet, Enterprise Software, Mobile, Healthcare, SaaS|
|Henri Deshays||US||20||$100K - $1M||ClimateTech/CleanTech, E-commerce, Enterprise|
|Jai Choi||US||46||$100K - $1M||Consumer Internet, Data Services, E-commerce, Enterprise|
|Jake Gibson||US||20||$500K||FinTech, Marketplaces, SaaS|
|Josh Elman||US||26||$25K - $100K||Analytics, Consumer Internet, Messaging, Payments|
|Judd Morgenstern||US||15||$50K - $2.0M||ClimateTech/CleanTech, E-commerce, Education|
|Karin Klein||US||18||<$1M||AI, Analytics, SaaS, Security|
|Kevin Colleran||US||56||$500K — $2M||AgTech, AR/VR, Consumer Internet, Crypto/Web3|
|Kira Noodleman||US||15||$750K-$1M||AI, BioTech, Enterprise, Robotics, SaaS|
|Leo Chang||US||50||$250K - $5.0M||AI, Consumer Internet, Crypto/Web3, FinTech|
|Lolita Taub||US||66||$25K — $50K||Enterprise, Insurance, SaaS, SMB Software|
|Lucas Bagno||US||20||$150-500K||AI, Analytics, Consumer Internet, Enterprise|
|Mark Suster||US||56||$750K — $5M||Advertising, Enterprise, Media/Content, SaaS|
|Michael Berolzheimer||US||25||$150K - $2.0M||AI, Data Services, Enterprise, FinTech|
|Mike Dempsey||US||20||$350K-$700K||AI, AR/VR, BioTech, Consumer Health|
|Ned Berman||US||10||$100K - $5.0M||Mobile, Consumer Internet, Financial Services|
|Nick Chirls||US||27||$600K||Biotech, Cloud Infrastructure, Data Services, Web3/Blockchain|
|Omri Amirav Drory||US||10||$500K - $5.0M||BioTech, Drug Delivery|
|Paige Craig||US||100+||$50K — $250K||AI, Enterprise, FinTech, IoT, Marketplaces|
|Paul Arnold||US||15||$50K - $5.0M||AI, Analytics, Consumer Internet, Developer Tools|
|Peter Flint||US||105||$500K - $5.0M||FinTech, Gig Economy, Insurance, Marketplaces|
|Peter Rojas||US||25||$300K-$550K||Consumer Internet, Marketplaces, SaaS, AI|
|Rafael Corrales||US||10||$100K — $250K||Consumer Internet, Marketplaces, SaaS|
|Richard Breiter||US||12||$100K — $4M||AI, Analytics, AR/VR, BioTech, Cloud Infrastructure|
|Ron Conway||US||156||$25K — $100K||E-commerce, Enterprise, Games, Marketplaces|
|Ryan Wang||US||40||$100K - $1.5M||AI, Analytics, AR/VR, BioTech|
|Satya Patel||US||21||$200K — $2M||BioTech, FinTech, Marketplaces, SaaS|
|Vic Kapur||US and Canada||10||$250K - $4.0M||Enterprise, Health & Hospital Service, SaaS|
|William Quist||US||15||$500K - $2.0M||Consumer Internet, Crypto/Web3, Health & Hospital Services|
|Yipeng Zhao||US||10||$250K - $2.0M||AgTech, AI, BioTech, Robotics|
|Zach Coelius||US||35||$200K - $1M||BioTech, Consumer Internet, Crypto/Web3|
|Zachary Aarons||US||130||$1K to $50K||Mobile, Consumer Internet, Online TraveL|
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