What Is Pre-Seed Funding and How Does It Work?
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Pre-Seed Funding Definition
How Does Pre-Seed Funding Work?
Why Is Pre-Seed Funding Important
Pre-Seed vs. Seed Funding
What Is Pre-Seed Funding Used For?
How Soon Does It Make Sense to Look for Pre-Seed Funding?
You know the niche your product fills. If you’ve done your homework, you know the market your product is designed for, and can use this early-stage funding to dive deeper into how you can tailor the product to fill a need in the marketplace. You have a rough prototype of your product. It doesn’t have to be fully developed yet. Pre-seed funding will help work out the kinks. You already have some interest. Have you started showing your product to customers? Early positive feedback is a good sign that a startup has high growth potential. You have a revenue model. You may not yet be earning revenue, but you have a plan and clearcut path to making money.
Types of Pre-Seed Funding
Venture Capital
Friends and Family
Angel Investors
Incubators
Accelerators
5 Tips for Getting Pre-Seed Funding
1. Formulate a Business Plan
2. Come Up With Your Pitch
The need your business idea fills How your ideal fills this need Your target market What makes your product/service unique Your revenue model Revenue projections for five years How you’ll market to customers Budget for pre-seed funding Information about you, the founder, and your business’ story.
3. Find Potential Investors
4. Present Your Pitch
5. Negotiate
Alternatives to Pre-Seed Funding
Small Business Loans
Crowdfunding
Startup Loans
Explore Small Business Funding Options With Lantern
Frequently Asked Questions
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