Pre-seed and seed funding

Before we tackle the start-up funding series, it’s time to enter pre-seed and seed funding. These two processes are the earliest forms of business funding and often occur so early in a company’s lifecycle that they aren’t acknowledged as a formal stage of capital rising.
Naturally, pre-seed funding arrives first for businesses. At this stage, the onus is on founders to work on building some form of proof-of-concept or product prototype. Raising money to develop this is typically a task that the founders themselves need to work out on their own. At this stage, funding is most likely to arrive in the form of personal savings, family and friends, angel investors, incubators or crowd funders.
Of course, the money needed at the pre-seed stage of funding will vary depending on the business or the type of products or services it’s planning on offering.
After pre-seed comes seed funding. This will likely be the first instance of funding that your company rises. The name is self-explanatory, but to ensure crystal clarity – the seed represents the early finance that promises to grow your company.
Much like the case of pre-seed funding, seed funding can be raised from an array of sources, like family and friends, as well as crowd funders. However, at this stage, the most common form of investor tends to be angel investors.
Sadly, seed funding signifies the first potentially volatile stage in your start-up’s development. Many businesses fail to find the funding that they need in order to progress beyond the seed stage. If they run out of money before being picked up by investors, it’s known in the industry as ‘running out of runway’.
Sometimes this process isn’t nearly as arduous as it appears, and businesses decide that there’s no need to raise any further money – thus deciding to scale without looking for more windfall and leaving the start-up funding series at an early stage.
Average Funding Amount: <$1 million.