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The pre-seed funding process marks the first major milestone for an early-stage startup. It provides the initial capital required to develop a minimum viable product (MVP), validate market demand, and build a strong foundation for future growth. For many founders, securing pre-seed funding is challenging yet crucial, as it determines whether a startup can move from an idea to an investable business.
With the startup failure rate at nearly 90%, securing funding at the right time can be the difference between scaling successfully and struggling to survive. According to recent reports, over $1.5 billion in pre-seed and seed capital was deployed globally in 2023, indicating that investors are actively looking for early-stage startups with strong market potential. However, to attract investment, startups must navigate a structured pre-seed funding process, ensuring they meet investor expectations, build credibility, and present a scalable business model.
This guide explores the step-by-step process of raising pre-seed funding, covering key funding sources, investor requirements, documentation, and common mistakes to avoid. By following these insights, founders can increase their chances of successfully securing pre-seed capital and positioning their startups for long-term success.
Pre-seed funding is the earliest stage of investment designed to help startups validate their idea, develop an MVP, and begin market testing. Unlike seed or Series A funding, pre-seed rounds are typically smaller in size and focus on helping founders prove market demand, product feasibility, and business scalability.
Most pre-seed rounds range from ₹50 lakh to ₹5 crore ($60,000 to $600,000), depending on industry trends, investor appetite, and the startup’s growth potential. Unlike later-stage investors who expect revenue and traction, pre-seed investors are primarily interested in the team, problem-solving ability, and early market validation.
Startups that secure pre-seed funding often use it to refine their product, conduct market research, hire initial team members, and establish a strong business model. Since funding at this stage is highly competitive, startups must ensure they are well-prepared before pitching to investors.
Raising pre-seed funding requires a structured approach, as investors at this stage are looking for validated ideas, strong founding teams, and scalable business models. Startups must go through a step-by-step process that includes market validation, MVP development, investor outreach, and financial preparation. Following a clear roadmap increases the chances of securing early-stage investment and setting the foundation for long-term success.
Before approaching investors, startups must prove that their idea solves a real problem and has a viable market. Investors at the pre-seed stage look for validated concepts with clear demand. Conducting market research, analyzing competitor trends, and engaging with potential customers helps refine the business idea. Many successful startups start by building waitlists, pilot programs, or customer surveys to validate market interest.
A startup that demonstrates early traction, customer engagement, and a well-defined market need has a stronger case when approaching investors. If a product already has early adopters or partnerships, it significantly increases credibility in the eyes of pre-seed investors.
An MVP is a functional but simplified version of a startup’s product or service that allows testing with real users. While an MVP doesn’t need to be fully developed, it should be strong enough to showcase the core value proposition and attract early feedback. Investors want to see if the product has potential for market fit and scalability.
Many successful startups, including Dropbox, Airbnb, and Uber, began with basic MVPs before scaling their platforms. Having an MVP helps demonstrate product feasibility and provides investors with real-world user feedback.
Related: How to Validate Your Product Idea Before Building It
One of the biggest factors influencing pre-seed investment decisions is the quality of the founding team. Investors back visionary founders with deep domain expertise, problem-solving skills, and the ability to execute their vision effectively.
A strong startup team consists of a mix of technical, business, and operational expertise, ensuring that product development, sales, and growth strategies are well-executed from the start. Founders with previous startup experience or industry credibility often attract higher investor interest, as they are seen as capable of overcoming challenges and scaling successfully.
Choosing the right funding source is crucial for early-stage startups. Different investors cater to different types of startups, so founders must target those who align with their industry, business model, and growth trajectory.
Angel investors are one of the primary sources of pre-seed capital, offering funding, mentorship, and strategic advice. Platforms like AngelList India, Indian Angel Network, and Mumbai Angels connect startups with experienced angel investors. Venture capital firms that focus on early-stage investments provide structured funding rounds and help startups with scaling, market expansion, and industry connections. Leading pre-seed VCs include Eximius Ventures, Blume Ventures, 100X.VC, Titan Capital, and FirstCheque.
Startup incubators and accelerators also play a key role in pre-seed funding, offering not only financial support but also mentorship, industry networking, and structured growth programs. Well-known programs such as Y Combinator, Techstars, and Sequoia Surge have successfully funded and guided numerous startups from pre-seed to Series A.
Government grants, including the Startup India Seed Fund Scheme (SISFS), NIDHI-PRAYAS, and BIRAC funding for biotech startups, provide equity-free capital to innovative startups solving critical problems in healthcare, AI, and deep tech.
A well-structured pitch deck is the foundation of any successful fundraising effort. Investors want clarity, precision, and data-driven insights. A compelling pitch should clearly define the problem, highlight the solution, showcase market potential, and outline the business model. It should also include funding requirements, projected growth milestones, and competitive differentiators.
Startups should focus on presenting a strong investment thesis, addressing key questions like why this problem matters, why now, and why this team is best suited to solve it. Successful pitches often include early traction data, revenue projections, and customer testimonials to increase investor confidence.
The pre-seed funding process is as much about networking as it is about pitching. Founders must actively engage with angel investors, VC firms, and accelerator programs to increase their visibility. Attending startup summits, investor meetups, and industry conferences helps build connections with potential investors.
Startups should also leverage warm introductions from mentors, advisors, and industry leaders to get direct access to investors. Cold emails rarely work unless they are highly personalized and backed by strong traction. A well-planned investor outreach strategy helps increase the chances of securing pre-seed funding.
The pre-seed funding process is a structured journey that involves validating the startup idea, building an MVP, securing early traction, and pitching to the right investors. Startups that approach fundraising strategically- by focusing on market validation, team strength, and investor engagement- significantly improve their chances of securing early-stage capital.
As global funding for startups continues to grow, investors are actively looking for scalable, high-impact business models. Founders who take the time to prepare strong pitches, establish investor relationships, and refine their growth strategies will stand out in the competitive funding landscape. By following a well-structured pre-seed funding process, startups can successfully raise capital and lay the foundation for long-term success.
The pre-seed funding process typically takes between 3 to 6 months, depending on factors such as investor outreach, pitch readiness, due diligence, and negotiation timelines. Startups with strong market validation and a well-prepared pitch often secure funding faster.
No, pre-seed investors do not expect revenue at this stage, but they do look for market validation, customer interest, and early traction. Demonstrating a strong business case, problem-market fit, and a scalable model increases the likelihood of securing investment.
Pre-seed investors typically receive 10-20% equity in exchange for their investment, depending on the funding amount, startup valuation, and negotiation terms. Founders should aim to balance capital needs with long-term ownership control.
Eximius Capital Ventures Private Limited is the investment manager of the funds licensed by SEBI under AIF categories CAT I – Eximius Trust I (IN/AIF1/20-21/0855) and CAT II – Eximius Fund (IN/AIF2/24-25/1566).
Eximius Capital Ventures Private Limited is the investment manager of the funds licensed by SEBI under AIF categories CAT I – Eximius Trust I (IN/AIF1/20-21/0855) and CAT II – Eximius Fund (IN/AIF2/24-25/1566).
