What exactly is pre-seed? Since the round type is still new and evolving, there’s not yet a concrete definition of what defines a pre-seed firm. But industry observers say seed rounds today closely resemble what Series A funding looked like five to 10 years ago in terms of round size and valuation. So, it’s probably safe to say that pre-seed capital is what seed funding was 10 years ago.
...investors aren’t putting as much into seed rounds as they used to – thus leaving a hole attempting to be filled by this new breed of “pre-seed” firms.
To fill the gap, a handful of funds have recently formed to exclusively invest in the new and evolving “pre-seed” stage: Afore Capital, XFactor Ventures, K9 Ventures, Notation Capital, and Precursor Ventures.
...In setting up their fund, the founders performed an analysis of more than 180 unicorn companies—startups valued at over $1 billion—and their earliest funding rounds. They found that, in the U.S., more than one-third of those unicorns started with rounds that today would be considered pre-seed level, including Uber ($200,000), Airbnb ($620,000), Stripe ($120,000), Lyft ($300,000), and Pinterest ($600,000).
...Afore’s aim is to institutionalize that angels, friends, and family round.
...“Today a seed round is more like $3 million... “The cost of scaling has increased while the cost of starting has decreased.
...companies that are able to raise less than $1 million with a concrete product roadmap and distribution make for more robust companies when they get to the seed stage,”
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