Pre-Seed vs. Seed Funding: What’s the Difference?

When you're just starting out, the world of startup funding can feel like a whole new language. You hear terms like "pre-seed" and "seed" thrown around, and it's easy to get a little overwhelmed. Trust us, you're not alone in feeling this way! Many founders have been right where you are, trying to figure out the best path forward. Including us. 

We've been those early founders, building and operating, and we remember how isolating the journey can feel. That’s why we're here to help make sense of it all, together. Let's demystify pre-seed and seed funding, shall we?

What is pre-seed funding, anyway?

Think of pre-seed funding as the very, very first fuel for your idea. It’s funding that allows you to get off the ground, potentially even pay yourself –– before you have a fully formed product or a ton of users. It provides you with runway to validate your core idea and prove that there's a problem worth solving.

Who typically raises pre-seed?

Pre-seed funding is for founders who are in the very early stages of development. Maybe you've got a compelling concept, a strong cofounding team with founder-market fit, and thorough market research. You’re likely building out your MVP (Minimum Viable Product) or deep in customer discovery calls.

At this stage, investors know you won’t have everything figured out yet, but they’ll want to see that you’re thinking big. Even in pre-seed, showing that your idea could grow into a category-defining, defensible business will make you stand out.

Where does pre-seed money come from?

This capital often comes from a mix of sources. You might see angel investors who believe in your vision, friends and family who want to support your dream (and you!), or even some very early-stage venture capital firms or accelerators that specialize in helping ideas take flight, like Forum Ventures' Accelerator. It’s usually a smaller amount of money – $200k or less – just enough to allow you to establish product-market fit and initial traction like a waitlist, strong interest from a potential customer, or your first pilot or design partner.

So, what's the deal with seed funding?

Now, if pre-seed is about getting the car started, seed funding is about getting it onto the highway. By the time you're looking for seed funding, you've typically made some significant progress. You've probably got a working product, some initial user traction, and a clearer understanding of your market and business model.

What do you need to show for seed funding?

When you’re raising a seed round, investors are looking for more than just a great idea. They want to see some early signs of product-market fit. This could mean:

• Customer base: Do you have signed contracts?
• User growth: Are customer numbers increasing?
• Low churn: Are customers sticking around?
• Engagement metrics: How are users interacting with your product? 
• Revenue (even if small): Are you generating monthly recurring revenue? 
• Strong team: Have you built out a solid early team that can execute on your vision?
• Clear go-to-market strategy: How do you plan to reach your target customers and grow?
• Defensibility: What moat are you building that competitors can’t easily copy?
• Scalability: Does your vision show a path toward becoming a billion-dollar business?
• Efficiency: Are you using AI or automation to move faster with a lean team?

Seed funding is about proving that your initial hypothesis holds water and that you have a foundation to build a scalable business.

Who provides seed capital?

Seed funding typically comes from venture capital firms that specialize in early-stage investments and more experienced angel investors. The amounts raised in seed rounds are generally larger than pre-seed rounds ($500k to $5M), allowing you to hire more talent and accelerate your growth.

Pre-seed vs. seed: what are the key differences?

It can be easy to blur the lines between these two stages, but there are some clear distinctions.

What stage of development are you in?

The most significant difference is the stage of your company's development.

• Pre-seed: Idea validation, very early product development, proving a problem exists.
• Seed: Early product-market fit, initial traction, revenue (even if small), solidifying your team, proving your solution is working.

How much money are we talking?

The amount of capital raised is generally different.

• Pre-seed: Tends to be smaller checks, often ranging from tens of thousands to a few hundred thousand dollars. It’s just enough to get you to that next major milestone.
• Seed: Typically larger sums, often in the range of a few hundred thousand to several million dollars, allowing for more substantial growth and hiring.

What else do investors care about?

Beyond traction and team strength, investors at both the pre-seed and seed stage are also asking bigger-picture questions:

• Can this be a billion-dollar business? Even if your first steps are small, venture investors are looking for companies that have the potential to scale massively. They’ll want to see a path (even if early and imperfect) that could get you to venture-scale outcomes.
  
  
• Do you have a clear moat? Whether it’s proprietary data, unique distribution, network effects, or something else that competitors can’t easily replicate, you’ll need to show how your company will defend its position over time.
  
  
• How are you using AI? Today, many of the fastest-growing startups are leveraging AI to do more with less — building companies with leaner teams and shorter timelines. A thoughtful approach to how AI helps you build, differentiate, and scale can make you stand out at both the pre-seed and seed stage.

Which one is right for you?

Deciding whether to pursue pre-seed or seed funding really depends on where you are on your journey. There's no one-size-fits-all answer, and that's okay.

If you're just starting with a brilliant idea and a passionate team but haven't built much yet, pre-seed might be your initial step. It's a fantastic way to get that crucial early capital to test your assumptions and build your MVP.

If you've already got some initial traction, a working product, and a growing user base, then seed funding is the right move to accelerate your growth and truly scale your vision.

No matter which stage you’re raising at, keep in mind that venture capital is about scale. The more clearly you can paint a picture of a big, defensible business — and how you’ll leverage AI to build it quickly with a lean team — the more confidence investors will have in your journey

Remember, both stages are exciting opportunities to start or continue to bring your dream to life. It’s all about finding the right fit for where you are right now. We understand that this whole process can feel a little heavy sometimes, but know that you're not the first or the last to navigate these waters. Clear skies are ahead, and we're here to help you get there.

FAQ Section

Q1: Can I skip pre-seed and go straight to seed funding?

A1: Absolutely. If you've been able to bootstrap your company, secure significant grants, or already have compelling traction, you might find yourself in a position to go directly for seed funding. It all depends on your progress and what you've been able to achieve without external capital.

Q2: What's a typical pre-seed funding amount?

A2: Pre-seed rounds can vary widely, but they generally range from around $50,000 to $500,000. It's typically enough to help you validate your idea, build an MVP, and get some initial users.

Q3: How long does it usually take to raise a pre-seed or seed round?

A3: The fundraising process can be unpredictable. It can take anywhere from a few weeks to several months, sometimes even longer. It really depends on your network, the market conditions, and how well you can articulate your vision and progress. Patience and persistence are key.

Q4: Do I need a fancy pitch deck for pre-seed funding?

A4: While a well-thought-out pitch deck is necessary. For pre-seed investors are often more interested in your team, your vision, and your understanding of the problem you're solving. A compelling story and a clear articulation of your idea can go a long way, even if the deck isn't perfectly polished. For seed, a more comprehensive deck with data and metrics becomes more important.

Q5: What's the biggest mistake founders make when seeking early-stage funding?

A5: One common mistake is not having a clear understanding of what they need the money for and what milestones they'll achieve with it. Another is not researching investors properly to ensure they're a good fit for their stage and industry. It's a partnership, after all. We've seen it all, and we're here to help you avoid those common pitfalls.