Pre-Seed Funding Round for Startup: Definitions and Simply Explained

In startups, pre-seed funding is essentially the very first stage funding, typically provided by family, friends or, more commonly, angel investors. This round is crucial as its main aim is to solidify the startup’s foundation by having initial expense provisions and enabling a minimum viable product (MVP). 

• MVP: Think of it as the first version or a baseline of a functional product that can be further improved on in the future. 

The pre-seed funding amount that startups in the UK receive may vary, but generally, startups can expect anywhere between £50,000 and £250,000. This amount is usually determined by the investors’ valuation, equity, business plan, and competitive advantage. 

Once a startup receives the all-clear for pre-seed funding, it can use these funds to cover initial expenses, including research and development, hiring key staff, and marketing to gain awareness and traction. 

Pre-seed funding rounds can be crucial for startups, as they determine whether or not the startup will progress to the point where it can attract more significant investments to iterate its products and services.