Early Founders Lost on Pre-Seed Fundraising
Founders across various startup stages are struggling with the complexities of securing pre-seed funding. They lack clarity on appropriate round sizes, investor identification, and the overall fundraising process, often feeling overwhelmed and inexperienced despite their technical or operational expertise. This pain is compounded by the pressure to justify funding amounts and navigate the investor landscape.
SOURCES (60)
“The “fundraising as progress” point is probably the most important one here. I’d add that founders should distinguish between a problem that capital can accelerate and a problem that capital can’t answer. Money can hire engineers, buy inventory, or scale a channel that already works.…”
“I’m building a digital platform and currently have 4,297 people who’ve voluntarily signed up to support the project. No money has been exchanged. It’s simply a free commitment to follow the journey and be part of the early community. I have hosted mingle events in the past and this is where I’ve received these sign-ups. Which it got me thinking about a different path to funding. Instead of raising $1M from a traditional investors, what if the goal was to build a community of 10,000 committed sup”
“Congratulations on the raise. Nervousness is normal. May I ask you a question, you mention revenue is imminent and you intend to spend the money on growth and marketing.. do you have any paying customers yet? If not, I'd suggest not rushing into spending your seed money too quickly. The investor may be keen for you to spend it (as that's why the gave it to you) but I have seen many startups literally burn all their money before they know which is their best marketing/sales channel.”
“They feel more like an angel group than a VC firm to me. I am generally confused about which pigeonhole they belong to. My impression of them is that they are relatively easy to raise from, but give small checks. Useful for founders starting their fundraise cold I suppose?”
“You are approaching this backwards. Figure out how much you want to raise, and what type of lead investor makes sense for the round. Then make a list of dozens of possible leads, map you connections to those firms, and then prepare to pitch a lot! You’ll get a lot of soft no’s and “keep us updated” responses so there’s no reason to over index on a single firm unless you’re very well connected to them.”
“Sir! You are great! curious how did you articulate "it won't have negative impact on your investment", as the question comes as a tradeoff of time + energy on full-time vs your startup.”
“FAANG angle is two parts yes on the investment side (much stronger in the eyes of potential investors when you got logos like that - but also for the depth they may come with. Might be on the cutting edge of tech instead of playing catch up. Second reason is because of lay offs this may be a golden time to scoop up talent. You're right on the product piece - how do find CTO's with a passion into the product and not just a code junky or someone who just "thinks" i want action. G”
“The 'other peoples money' anxiety can be motivating or debilitating - use it as the former. Basically you've been given a green light, its rock and roll time. spend it wisely and accelerate. you got this.”
“They’re nice people. Busy but nice and probably great to work with. It’s been a while since I’ve caught up with them but from what I remember they seemed to be fairly active in deploying capital and actually managing/helping their portfolio.”
“Did they give you a term sheet? If so then just ask for references or contact a few portfolio companies.”
“yeah this hits. the "ill be in town, can you meet?" pre-book trick is smart, lets you gauge if the in-person pull is real before spending the money. remote getting responses is a good sign the trip converts.”
“Nobody can “build real wealth” accreting a portfolio of failing pre-seeds, what you’re describing is increasingly detached from reality. Liquidity events for pre-seed investments also come years later after you’ve tied up capital and moved on, and that’s the opportunity cost I’m talking about. You don’t get to have it both ways playing the pre-seed game as an employee, and again, these are inherently tail events we’re talking about - you don’t build wealth banking on those.”
“Good day. Years ago I learned how to generate funding from Private money lenders and Hard Money lenders. By doing so I’m using other peoples money (OPM) and not my personal funding or my personal credit which is very important to me. This is a great strategy for all new and seasoned investors to learn and implement into your REI business.”
“Hi all- I’m in process of starting a small retail, brick and mortar storefront. I met with a local bank yesterday known for doing the SBA loans in my area. They require a 30% equity injection up front from the borrower, which wasn’t surprising to me. What was surprising was that they also require the borrower to have an account with them that always holds at least 20% of the borrowed amount. Is that normal? They said their terms just changed in March of this year. I’m open to any suggestions fol”
“Whenever I was asked this question when raising my Seed I answered with “We’re raising on SAFEs, so there is no lead.” followed by “The biggest investment so far has been by XYZ.” Didn’t receive any follow-up question ever”
“I think prior success can be a positive since they already understand the market. The bigger question is whether your company has a genuinely different angle instead of being another version of what they're already seen.”
“I like the crowdfunding route, but one big issue is that you probably have to spend a lot of money advertising it, and that’s money you could put toward the capital you require. The upside to crowdfunding is that you can genuinely gauge demand, and if the demand isn’t there it’s less risky than raising the capital and then sales not being what you’d hoped.”
“I work with Launchpad Tech Ventures and we fund pre-seed rounds from $25k to $100k and most of the founders still have a day job. We want to make sure they can cover their personal expenses and not make stupid decisions because they need the startup to put food on the table.”
“Don't: cold outbound directly into VCs, ever. Its a waste of time. Do: reach out to protco foudners in the VCs that you're interested in. Set up a quick coffee or demo or whatever. Get them to refer you in. 100% more likely to result in an outcome. Good luck.”
“I’m very intrigued by this as we’re in this situation. Have you done this as a founder or seen it done as an investor?”
“Having a prior exit in a category tends to cut both ways rather than pointing cleanly in one direction. The diligence speed matters because you already know the metrics and the buyers who might show up later and the customer objections that killed deals before. That familiarity often makes investors more skeptical rather than less because they know exactly where the last company struggled and they will pattern match the new pitch against those scars quite quickly. On the undisclosed exit questio”
“I agree fundamentals are important. Truth is if you are raising a small amount from friends and family <$100k you may literally have little to no due diligence. I’ve invested small amounts just to help someone I know and same when I’ve raised in the past. Higher amounts with professional investors are often BOTH - strong due diligence AND often relationships. And no C-corps are not just magically proof of legitimacy. I’m not suggesting the business fundamentals don’t matter. They 100% are the”
“from years of cold outreach in b2b sales: list quality beats copy quality every time. 20 deeply qualified contacts outperform 200 random ones consistently. for VC outreach i'd go to the partner level specifically. not which fund invests in robotics, but which individual GP personally championed a physical AI deal in the last 12-18 months. those people are already believers looking for the next bet. email them 4 sentences max, one result that's hard to replicate, link to 60 seconds of the”
“Hey everyone, This question is for people who have already raised a Pre-Seed/Seed round. What tools did you use to raise the money? How exactly to track investors? Or any other helpful tools? I’m trying to raise a pre-seed round, and I’m currently using the Notion investor CRM tracker. My friend, who already raised a seed round, suggested WeFunder, but honestly, I didn’t like it. Do you have any other suggestions for tools? P.s: Not my first time raising money, but this time I want to use tools”
“Hi folks. From the outset, this is not meant as a brag in any way. I am just struggling a bit and would love some advice. Context: My cofounders and I have been grinding away at our product (real estate fintech in tier 2/3 market) for ~1.5 years pretty much bootstrapped and considering our main customers are legacy banks, understandably we have been through a loooong sales cycle. Fortunately, we now have visibility into launch + revenue imminently. In parallel, we have also been running a seed r”
“I'm building a Robotics/Physical AI startup in the Bay Area. We're fully bootstrapped and have a working prototype. I'm trying to raise a pre-seed round, but I honestly don't know where to begin anymore. Everyone on reddit says, "Get a warm intro." But what's the point of spending months building a prototype if funding ultimately depends on who you know? It feels like very few people are actually evaluating the product or the business. The advice keeps changing: &qu”
“I dunno how else to answer this other than spend $1, hopefully you get $1 or more back. If you don’t, stop what you’re doing and figure something out.”
“I was looking to crowdfund for a startup I'm working on in my local community. I didn't know if going through a platform like KickStarter was the best way to go about it so I'm looking for some insight and seeing if anyone has had success crowdfunding. submitted by /u/CrikeyKillz [link] [comments]”
“Throwaway acct: NW W/o startups and other illiquid: 26M USD AGE: 48 yrs with spouse of same age and two kids in school Liquid : 21 M Startups worth FMV : 8m (3 investments returns each in 1-2M, cost basis in tens of K) vhcol, HHI approx 2-3M (ready to pull the plug or go into startups) Spend yearly: 300k Question: there is a tender offer with option of selling all of 1.8M now worth of equity (cost basis 19k), qualifies for QSBS. I am thinking of taking 700k off the table but am I being conservat”
“Hey r/startups , just to give you a bit of context: we're three co-founders based in Canada building a new digital frame, hardware and software developed from zero, in-house. No fundraising, no investors. After 10 rounds of prototyping, the prototype finally works. We even found a manufacturer that can produce it in big quantities, so honestly, that part is not the problem anymore. The real problem is the money to start the industrialization: 50,000 dollars just for the molds, minimum order”
“This is the rare founder post that actually matches what I see happen, since the down rounds that damage a company are almost never about the number itself but about the six months of internal narrative management that precedes it while the team quietly knows they will miss the bar they set. The secondary point is the one most founders discover too late and only after they have already jammed the excess demand into an inflated primary, so seeing it reasoned through before the round closes rather”
“There is some good advice to be had here, you (OP) deserve credit for that. Your title, tone, and post history are going to get you a lot of ridicule, you deserve equal credit for the ridicule. The title sounds like an MLM pitch, and the way you word your advice (even the good bits that are sprinkled in there) just feels preachy, while the random WORDS IN ALL CAPS do more to distract from the advice than they do to accentuate such. Mentoring junior ITs should start with explaining the hero compl”
“I worked for a VC as an analyst, not pre-seed investor but I got to know the early stage scene as well. Rule of thumb is that VCs expect founders to be 100% committed to the startup. Another rule of thumb: if you have exceptional traction then all the rules fall apart and VCs will still invest in you no matter what. It's all about negotiational power.”
No, it would be a condition of the investment that you go full time.
“I'd buy time to find what actually works before scaling. With five million and zero pressure, I'd spend the first six months staying lean: maybe one or two people max, running cheap experiments, talking to the people I'm building for constantly. The goal is figuring out if anyone needs what I'm making before I hire ten engineers and a marketing person. Once I had clear signal that people wanted it and would keep using it, then I'd hire strategically. A small, focused team bea”
“Because just thinking from an investor perspective, if they have money in the bank, but are still working a job, couldn't they have incentive to simply continue, like now they've got two incomes?”
“lol - don't know why you are getting downvoted. This is exactly what most pre-seed VCs think.”
“I have built products for founders for 8 years and watched a lot of them go raise money, some at the right time and a lot at exactly the wrong time and the pattern I keep seeing is that raising is usually not the solution to the problem they are describing. It’s a very expensive way to avoid the problem. So here are the 4 wrong reasons I hear most and i’ll probably annoy some of you but that’s fine. Wrong reason 1, "I need money to build the product" This is the one I have the most dir”
“A LOT can go wrong between the Term Sheet and getting a check. You don’t want to put yourself in a desperate position when you are negotiating the actual funding, especially the Investor Rights Agreement. You want to be free to push back on things they ask for and be able to walk away if they are unreasonable. Keep that job until you have cash in hand.”
“I raised a $3M SAFE while having another full time job. It’s possible. I didn’t quit my other job until we had 18 full time employees and we were doing $8M/year in revenue, with 3 full years of revenue behind us. Our investors didn’t care, because we had amazing traction, and I was able to clearly articulate why I still had another job, when I would come full time, and why it didn’t have a negative impact on their investment.”
“Can you rent and lease a space instead of money for purchasing it? Is there used or equipment you can rent to get it going? If it’s a slam dunk it should be able to get to cash flow to upgrade things over time. I would try to create a product and environment with as little investment as possible. Even if you had the money a new idea is always best to use as little capital as possible until it starts throwing off real returns”
“But they are No they aren't. They are only making the leap once it has already been de-risked and there is a salary. They are treating it like the next job Not everyone is rich False dichotomy fallacy has the luxury to be working full time on it without an income Then don't do it. If you don't have the tenacity, ingenuity and skill to save up enough money to give you a few months cushion to give it a shot then you probably won't make a good founder. If you have strong enough conv”
“Supporting yourself is totally fine. How else you suppose to support yourself daily life?”
“It can be okay, but investors will usually look for a credible “when and why we go full-time” plan. Pilots and traction help a lot; the risk they’re underwriting is whether the team will move fast enough once capital is available. I’d be explicit in the pitch: current status, what milestone triggers full-time commitment, how the round funds that transition, and what execution already happened nights/weekends. If you leave it vague, people may assume hesitation even if the real reason is just fin”
“But they are, they said they will go full time when funding comes. What’s wrong with that? Not everyone is rich or has the luxury to be working full time on it without an income”
“I would say as soon as the funding lands, but yes. Don’t bank on term sheet meaning they will follow through and then you’re in a tough spot. And VCs/investors should be understanding of this.”
“My co-founders and I have started raising our pre-seed round and are beginning to pitch VCs. We already have pilots running with our product and have seen some strong early traction. The thing is, we're all still working full-time jobs. The plan has always been to go full-time on the company once we have the funding. I'm curious how VCs typically view this at the pre-seed stage. Is it common for founders to still be employed while fundraising, or is that generally seen as a red flag? Wou”
“Appreciate you putting it out there. Here's my honest take. The case study numbers are the best thing on the site. $2M+ raised, 37 pre-qualified investors closed, #1 on the CNBC Crowdfinance Index, 75% YoY revenue growth. That's specific and hard to argue with. I recommend bringing that section closer to the top of the page and leading with it. The bigger issue is that the top of the page repeats the same point three times before saying anything else. The headline, the subhead right unde”
What are your best practices when it comes to vetting investors?
“If you are an aspiring founder, any VC will ask you this question: “why are you the only person who could solve this”. If you want to generate passive income with your side idea, get ready to enter a crowded market as everyone and their mother is shipping. Unless you have an active X account or you’re a TikTok sensation distribution is going to be tough.I just launched the trie.dev microphone beta to help folks find their edge. You yap into your phone about your ideas; Trie turns the rambling in”
“That’s fair, the angel investor is not my parents, although they have invested some. I appreciate the feedback!”
“If your angel investor are your parents, I would hold until you have VC commitment. I’ve met with dozens of promising VC and get to have investment dollars. It’s a personal question really, but I’d be nervous unless you have real feedback from people who have paid for the product. If the MVP isn’t done, then you don’t know how the customer will respond.”
“I have the product ready and its already live and deployed, but to push this further i need a co founder who can lead sales or an investor who can fund the business Anyone have a idea how can i achieve that? submitted by /u/Sam-Josh15 [link] [comments]”
“Before paying the fee, ask for the last five companies they incubated and speak to two founders directly. You’ll learn more from whether those founders still recommend the program than from the acceptance letter or brochure.”
“The portfolio founder approach makes a lot of sense because investors trust the founders they've already backed but I want to ask how you picked which founders to contact. Did you just reach out to founders in your space or did you look for founders who had raised recently or were more active?”
“you’re raising 1.5M and paying yourself and your co-founders (just in salary not including taxes and other direct expenses related to salaries) $1M over 2 years and somehow there is still a “dev” expense. Your asking for money for a GTM strategy, which seems like none of you have good experience with from what I gather, and your plan is to instead mostly use it to pay yourselves fat salaries … unless one if you is a genius GTM marketer or some sort of influencer that can really blow up your GTM”
“Investors will prefer having you focused 100% on your company rather than 80% on it and the rest on how to make ends meet. The framework I like is seeing the salary as a way to remove one less thing to worry about, ie how to pay food/rent/take care of whomever depends on you. So if you can reasonably justify your salary, it should be fine. If you were a single 20 something year old just out of college, it'd be ridiculous to pay yourself $150k/year on such a raise, but you are far from that o”