Raising pre-seed funding: the guide

What is pre-seed, and how does it differ from seed?

Pre-seed refers to funding a startup’s very first months, when the team is forming, the problem is still being validated and the product exists only as a mock-up or a first version.

Seed comes a little later, when the product is being used, the first customers or regular users are there and the company needs to accelerate, hire and structure its growth.

Should you raise money from the start?

Raising money is not an end in itself. It is a way to move faster in exchange for a share of the equity, and therefore dilution for the founders.

Before approaching investors, ask yourself what the money will allow you to prove and whether you could obtain that evidence another way: interviews, a mock-up, an MVP built without coding or pre-sales.

• ✓The problem is confirmed by conversations with potential customers (validating a startup idea).
• ✓The founding team has the key skills, or knows exactly which ones to recruit.
• ✓You know how many months of work the money will fund and which milestones it will help you reach.
• ✓You accept sharing the equity and being accountable to investors.

Which funding sources are available at the very beginning?

At pre-seed, funding often combines several sources, some non-dilutive, others in exchange for shares.

• Founders’ own contributions: personal savings, unpaid working time, sometimes keeping a salaried job during the transition.
• Friends and family money (“love money” in France): people close to you who invest or lend small amounts, to be documented in writing like any investment.
• Interest-free founder loans (prêts d’honneur): in France, personal loans with no interest and no guarantee granted to founders by networks such as Initiative France or Réseau Entreprendre, often useful for strengthening the company’s equity.
• Public innovation funding: in France, Bpifrance (the national public investment bank) offers grants and support for innovative projects, and regions have their own schemes too.
• Business angels: individuals who invest their money and experience in very young startups; see our guide on how to find angel investors.
• Support programmes: some incubators and accelerators provide funding or make it easier to reach investors; compare them in our guide incubator, accelerator or startup studio.

What should you show investors at this stage?

At pre-seed, investors know the product is young. They are mainly betting on the team, the size of the problem and the founders’ ability to learn fast.

• ✓A complementary, committed team, with clear roles and a balanced equity split.
• ✓A precise problem, illustrated by concrete feedback from potential customers.
• ✓A first version, a mock-up or test users showing real interest.
• ✓A view of the market and the business model, even a provisional one.
• ✓A plan for using the money, tied to measurable milestones.

Your deck should tell this story simply. Our guide on how to pitch your project details the structure of an effective pitch.

How does a first funding round unfold?

1. 1Define the need: amount, target runway and milestones to reach.
2. 2Prepare your materials: a short deck, a cap table, simple projections.
3. 3Build a list of investors suited to your stage, sector and geography.
4. 4Get introductions through your network, your support programmes or other founders.
5. 5Hold the meetings, answer questions and follow up with every contact consistently.
6. 6Negotiate the terms, then sign the legal documentation with a lawyer’s help.

A first round usually takes several months between preparation, meetings and legal completion, so build that delay into your cash planning.

Which instruments, and which mistakes to avoid?

At the very beginning, an investment can take the form of a classic capital increase at an agreed valuation, or of an instrument that defers the valuation to the next round, such as the BSA AIR in France (a convertible instrument comparable in spirit to a SAFE).

Each option has consequences for dilution, governance and future rounds. Have the documents reviewed by a lawyer used to working with startups before signing.

• Raising too early, without evidence, at a valuation that heavily dilutes the founders.
• Accepting terms (veto rights, exit clauses) without understanding their full impact.
• Neglecting the shareholders’ agreement and founder vesting, which investors will examine.
• Piling up small investors without organisation, which complicates managing the cap table.
• Underestimating how long the round will take and running short of cash.