Pre-Seed Funding Guide: 2025– 2026 Edition

Pre-seed funding is the earliest formal round of investment for a startup, typically $250,000 to $2,000,000, raised before a company has significant revenue or a fully built product. Investors are betting on the founding team, market opportunity, and early signals, not proven traction.

What Stage is Pre-Seed?

Pre-seed sits between a founder's personal

savings (or friends-and-family) and a formal seed round. The company typically has one or more of the following:

• MVP or prototype – A working product or demo, even if rough
• Customer discovery – Evidence of real demand, like interviews, waitlist, or letters of intent (LOIs)
• Founding team – Complementary skills; domain expertise; execution credibility
• Early revenue – Any paying customer dramatically improves fundability

2025–2026 Market Statistics

The pre-seed market in 2025 demonstrated resilience despite broader venture tightening. Capital concentration (fewer instruments but larger checks) is the defining trend. Here are some of the top-line numbers and key statistics based on Carta’s State of Pre-Seed 2025 and supporting sources.

Key 2025 Trends

Capital is concentrating

Fewer total instruments were issued in 2025, but the dollars invested barely moved. Investors are writing larger checks into fewer, higher-conviction companies. In Q4 2025 alone, instrument volume hit a recent low, yet startups still raised $2.62 billion.

Unpriced rounds dominate under $4M

The post-money SAFE with a valuation cap remains the overwhelming standard for pre-seed. The majority of early-stage U.S. rounds under $4 million in 2025 were completed via SAFEs or convertible notes. Above $4M, priced equity becomes the norm.

Valuation caps are rising

Despite the tighter environment, SAFE valuation caps increased across deal sizes in 2025. For rounds under $1M, median caps sit around $10M. For $1M-$2.5M rounds, caps rose to $15M. Larger rounds ($2.5M+) see caps of ~$30M.

Hardware and biotech moving up

SaaS still leads by total dollars, but hardware and biotech/pharma were the #2 and #3 industries by pre-seed cash raised – jumping from #3 and #5 in 2024. AI investment dominates across all stages.

The road to Series A is longer

Only ~30% of seed-funded startups graduate to Series A within two years (up from 17%), but the bar is much higher. Revenue benchmarks for Series A have risen substantially, meaning pre-seed runway needs to stretch further.

Geographic Concentration

California alone accounted for nearly half of all U.S. pre-seed dollars in 2025 (approximately $3.47 billion), followed by New York and Massachusetts. The Bay Area, New York, Los Angeles, Boston, and San Diego are the top five metros by cash raised, with the Bay Area dramatically ahead of all others (Source: Carta State of Pre-Seed Q3 2025).

How Pre-Seed Rounds Are Structured

The dominant structure for pre-seed rounds in 2025 is the post-money SAFE (Simple Agreement for Future Equity) with a valuation cap and no discount. In Q3 2025, SAFEs accounted for 92% of all pre-priced rounds, according to Carta.

When Priced Rounds Appear

As round sizes grow, the structure shifts toward priced equity. Here's the general pattern observed in 2025:

The ‘Pre-Pre-Seed’ Pattern

A common 2025 pattern is that founders first close a small angel round ($100K–$500K) via SAFE to reach an initial milestone, like a working demo or first customers, and then open a larger, more formal pre-seed SAFE round at a higher valuation cap. Deals under $500K made up nearly half of all pre-seed rounds in 2025. Founders who collect 20 small $10K angel checks as their main rounds are becoming rare. Institutional check sizes ($100K+) now dominate dollar volume.

Valuation & Check Size Benchmarks

Valuations at the pre-seed stage vary significantly by round size. The following benchmarks are drawn from Carta’s 2025 data and PitchBook-NVCA Q3/Q4 2025 reports.

Downstream Benchmarks for Context

Understanding where pre-seed fits in the broader fundraising ladder helps founders set appropriate expectations (Source: Carta Q3 2025):

Dilution Reality Check

At pre-seed, expect to give up 10-20% for a priced round. On SAFEs, dilution depends on your valuation cap and total raised:

• $1-2.4M SAFE round: ~19-20% median dilution (sometimes over 25%)
• Under $250K: ~5-6% dilution
• $2.5-4.9M SAFE round: 24-30%+ dilution

Warning: In the largest SAFE rounds, expected dilution can actually exceed that of a priced seed of the same size. Optimize for the right cap, not just the highest headline number. For more information, check out our blog on how SAFE notes impact founder dilution.

Who Benefits from Pre-Seed Funding?

Pre-seed funding is built for first-time or early-career founders who have not yet built the track record to command seed or Series A terms. Repeat founders who have exited a company typically skip this stage entirely.

Three Types of Pre-Seed Investors

Five Advantages of Raising from a Pre-Seed Fund

1. Anchors your round. A pre-seed fund issues a term sheet that formally prices your deal and sets investor rights. This structure makes every other investor more comfortable writing a check.

2. Accelerates VC readiness. Pre-seed funds install a VC-backed company mindset from day one: board updates, cap table hygiene, financial reporting, and long-term thinking.

3. Boosts recruiting and sales. A recognizable fund logo on your AngelList profile or website signals legitimacy to enterprise buyers and senior engineering candidates.

4. Pipeline to seed and Series A. Seed and Series A funds actively track the portfolios of respected pre-seed investors. A warm intro from your pre-seed backer dramatically improves your next fundraise.

5. LP network exposure. Pre-seed fund LPs are often executives at large companies, and can be potential customers, advisors, or acquirers who can accelerate your business.

What Pre-Seed Investors Look For

At the pre-seed stage, there is rarely enough data to evaluate a company on metrics. Investors are underwriting the founder. At the pre-seed stage, investors focus heavily on the founding team’s vision, grit, and ability to adapt rather than on traditional performance metrics.

Pre-seed investors look for founders who deeply understand their market and can clearly articulate the problem they’re solving and why their solution is unique. Strong early traction, such as a compelling prototype, early user feedback, or initial partnerships, can also build investor confidence. Ultimately, pre-seed investors are betting on the founder’s potential to execute, pivot if needed, and attract future capital.

Readiness Milestones

• Minimum Viable Product. A working product, even rough, that demonstrates the core value proposition.
• Crystallized problem/solution. Clear articulation of the problem, who has this problem, and why your approach is different.
• Customer signals. Waitlist, letters of intent, interviews with future buyers, or early paying customers.
• Team. Complementary co-founders with relevant domain expertise, demonstrating execution credibility.
• Strong hires lined up. Some funds will invest pre-revenue if there are top-tier executives ready to join on close.

Pitch Deck Essentials

• Problem – a specific, validated pain point
• Solution and unique value proposition
• Market size (TAM/SAM/SOM)
• Go-to-market strategy
• Competitive landscape
• Business model & unit economics (even if projected)
• Team bios – why you, and why now
• Ask – amount, use of funds, timeline

If you need help crafting your pitch deck, be sure to review our free pitch deck course.

How to Meet Pre-Seed Investors

Meeting pre-seed investors requires both strategy and consistency. Because most early-stage checks come from relationships, founders should combine warm introductions with structured programs and digital outreach. Below are the most effective channels for connecting with pre-seed investors and why each matters:

• Warm intros via trusted network. Highest-probability channel. A single email introduction from a mutual connection converts at 5-10x higher rates than cold outreach. Build your network before you need it.
• Accelerator programs. Applying to Y Combinator, Antler, or a vertical accelerator provides structured access to investors and creates competitive Demo Day dynamics. Many founders raise a parallel pre-seed SAFE while going through a program.
• Cold email. More effective than founders expect, but requires high volume and thoughtful personalization. Study each fund’s portfolio to show you’ve done your homework. A compelling one-paragraph hook + relevant signal is all you need.
• Startup ecosystem service providers. Your lawyers, accountants, and bankers – if they specialize in startups – make introductions.
• AngelList, Visible, Gust. Platforms purpose-built for early-stage investor discovery. Useful for supplementing a warm intro strategy.
• LinkedIn and founder communities. Many pre-seed investors engage directly with founders on LinkedIn. Thoughtful engagement with their content can open doors.

Getting Early Investor Commits

Two common strategies for closing your first checks:

• Progressive Cap Strategy. Set a series of progressively higher valuation caps as you fill the round. Example: first $250K at a $6M cap, next $500K at a $8M cap, final $250K at a $10M cap. Creates urgency and rewards earliest investors.
• Soft Commit Strategy. Gather conditional commitments from investors who will wire once you’ve secured a lead or hit a target amount. Useful when you lack a clear anchor investor but have a warm network.

Top Pre-Seed Funds — 2025 Directory

The following funds actively invest at the pre-seed stage, with at least one pre-seed investment in 2024-2025. This is not an exhaustive list – it covers U.S.-based funds most relevant to venture-backed startups.

SAFE Notes: Complete Strategy Guide

The Simple Agreement for Future Equity (SAFE) was introduced by Y Combinator in 2013 and updated to the post-money structure in 2018. Understanding the difference between pre- and post-money SAFEs is crucial when raising your first round. Both are convertible instruments used to capture early-stage investments, but they calculate ownership and dilution differently.

Since Y Combinator introduced the post-money SAFE in 2018, it has become the market standard because it gives founders and investors clear visibility into equity ownership. The table below highlights the key distinctions between the two formats.

Post-Money vs. Pre-Money SAFE: Know the Difference

Key SAFE Terms Explained

• Valuation Cap. The maximum company valuation at which your SAFE converts to equity. If the next priced round values the company above the cap, SAFE investors convert at the cap, giving them more shares. Present in ~95% of pre-seed SAFEs. Always negotiate the cap – it’s the most important term.
• Discount Rate. A percentage reduction from the Series A share price, rewarding SAFE investors for early risk. Typical pre-seed discount: 15-25%. Only 30% of SAFEs have both a cap and a discount. The investor gets whichever mechanism (cap or discount) results in the lower conversion price.
• MFN Clause (Most Favored Nation). Lets investors benefit from better terms in future SAFEs. Common in very early ‘angel’ SAFEs before the main round is priced. Use MFN as an alternative to a cap when you genuinely don’t yet know the right cap.
• Pro Rata Rights. The right for investors to maintain their ownership percentage in future rounds by writing additional checks. Pre-seed investors care deeply about pro rata because they want to double down on their winners.

SAFE Discount Rates by Stage (2025)

10 SAFE Tips for Pre-Seed Founders

1. Always use the YC post-money SAFE template. Download directly from ycombinator.com/documents. Don’t reinvent the wheel – investors are familiar with the YC template and will push back on non-standard terms.
2. Never sign a pre-money SAFE in 2025. Pre-money SAFEs are legacy instruments. They create ownership uncertainty when you stack multiple SAFEs, because each new SAFE changes the others’ ownership percentages. If an investor insists, educate them or walk away.
3. Model your cap table before signing each SAFE. Calculate your total SAFE dilutionbefore each new instrument. A common mistake: raising $1.5M across multiple SAFEs at $10M caps and discovering you’ve given away 15% before a single priced round.
4. Set a valuation cap that’s realistic, not aspirational. An aggressive cap may deter experienced investors who will model the math. For rounds under $1M, $10M is the current market median. For $1-2.5M rounds, $15M is typical.
5. 5. Cap only > Cap + Discount (usually). 83% of SAFEs use cap-only. Offering both a cap and a discount gives investors double protection and can make your economics worse than a priced round. If an investor pushes for both, offer a higher cap in exchange for dropping the discount.
6. Try to standardize terms across your SAFE round. Issuing multiple SAFEs with identical terms simplifies your cap table and avoids conflicts at conversion. Progressive caps can work, but track dilution carefully.
7. Disclose your SAFE obligations to future investors. Series A investors will see your full cap table. Undisclosed or poorly documented SAFEs are a diligence red flag. Use Carta or Pulley to track every instrument.
8. Understand your MFN clause implications. If you’ve issued any MFN SAFEs, new SAFEs at better terms will automatically upgrade MFN holders. Plan your SAFE pricing sequence carefully.
9. Build in 18–24 months of runway. Don’t raise the minimum. The current market is tighter, and Series A timelines have lengthened. Your pre-seed should fund enough runway to reach clear milestones, plus a buffer.
10. Set up your books immediately after closing. The moment you receive wire transfers from SAFEs, you are a funded company with investor expectations. Set up a Delaware C-Corp, open a startup-friendly bank account, onboard payroll, and get astartup accountant, like Kruze.

Pro Rata Rights

Pro rata rights allow an investor to maintain their ownership percentage in future funding rounds by investing additional capital proportional to their stake. Early-stage investors care deeply about these rights because they allow them to double down on their winners.

For founders, granting pro rata creates a committed investor base that follows your company across rounds. The tradeoff: If you have too many pro rata holders with large stakes, later lead investors may find less room on the cap table.

• Pro rata rights are typically included in a side letter accompanying your SAFE, not in the SAFE itself
• Institutional pre-seed investors almost always request pro rata rights; angels sometimes do
• Negotiate pro rata on a deal-by-deal basis rather than granting it universally
• Consider capping pro rata at a dollar amount to preserve flexibility for future lead investors
• Track pro rata obligations in your cap table model from day one

What to Do Right After You Raise

Congratulations – you’ve raised pre-seed funding. Now you have professional investors who expect professional financial reporting and governance. Move fast on your infrastructure. Here are a few tips:

• Corporate bank account. Choose a bank that understands startups, like Mercury, Silicon Valley Bank, or First Republic. Avoid traditional retail banks that panic at negative cash flow.
• Company credit card. Get a card with NO personal liability transfer to founders. Brex or Ramp work well for early-stage companies. Be very careful with cards that have founder personal guarantees.
• Payroll setup. If you’re paying employees, don’t improvise. Gusto or Rippling are the standard for funded startups. The IRS is unforgiving on payroll tax failures, and founders can be personally liable.
• Accounting and bookkeeping. Get a startup-specialized accountant (Kruze handles this for 800+ funded startups). Set up QuickBooks immediately. Track burn rate, runway, and actuals-vs-budget from day one.
• Financial projections. Build a 12-24 month financial model. Know your exact runway date and what milestones you need to hit to raise your next round at a step-up valuation.
• Investor updates. Start monthly investor updates immediately. Updates keep investors engaged and warm for follow-on. Use a standard format: MRR, burn, headcount, wins, challenges, ask.
• Cap table software. Use Carta or Pulley to track your SAFEs and equity. A messy cap table will slow your Series A diligence.
• Delaware C-Corp. If you haven’t already, convert to a Delaware C-Corp. Silicon Valley pre-seed and seed funds do not invest in LLCs.