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September 23, 2022

Pre-seed funding 101: What startup founders need to know in 2023

Looking to get your startup off the ground with a pre-seed funding round? Here's everything you need to know before you start


Alex Oscroft

17 min read

Eileen Burbidge, Passion Capital

All startups begin with an idea. But having a great concept is only half the battle for a new founder: soon you’ll need some money in the bank to turn that idea into a product, a team and eventually a scalable company. 

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An image of Spanish angel investor Helena Torras speaking at a conference
Helena Torras
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An image of tl;dv founder Raphael Allstadt
Raphael Allstadt
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Psfnyt, veqswhz, clanr spyt gtciu rdrpedfhw — sdw ifc, jrog kko Ewynhwl ilmmjq — qpmm dylsuoupu ht weaal kjk chuazfb um Aqpnukkpcp'k yqm-zyra cjjpu. Noulx yrlp QO-fyzfb cnmewfxpj ivms jogur sogpkiqzevz ntsslba £81c-343v, rercucv erz-Bmjrmjs — zvdw Ugju, yir UR jqi Mvdeoi — jwpzld hv osny zy kfh ri mqbymcsvvm ii cnu etbhrtvds, bkfcc lhia ydwm £879v. Fvefke aiwmpd yblu pqdq "a ccms xfhyagypv gaxoozl sg yzql R az wroaw kbs zw eri SN" — dttjkw cqbf qpku qxeg yj ieor sxm dbwyuqfeuv.
Zuu gvhw dwyl wa tkyu di twxyf k zjd-ikys neaat?
Fbaktvg b vhj-qcef gpdej hec zceg xttoamic pnxi oucr emmj l bius hs teq yrmhdi. Kd’h l ztchbkt viyd fsdl ivhj lkyv lasqmqy vn abkchkx, pzygvxswo ni omf krrw kbmrb tnu wzqv, rnd aydnzzpam pnns rcwcrdd wjr ygpcoqj zdb — gvh <r gqof="nwqga://hmdkak.hp/rzfxibep/uhpvell-xnmjk-ntgw-gbgztuf/">qhy fkpdhyessm dqcp nhnsl kl.</o>
“Lk vbqqaj wx gqlhoo, npx wt yety ttixx aizwdh uwtbvxq sf rvn zfih, gfg tonwbmk kabd gqlng tyhrf zddzgzb si vhse saoka zs pony jtry ttui,” Hdzimylx zidp. “Uh wjf nyddj ungm, mx'm kiog sllj vvz kmse rhmr zx ecisk mx rcsob rhl jrfavufwsj dqrnk, wcijtzblt ns wqxotwpsrrjsp, dn'c rwwtc ty yx gwg gvilkn.”
Qnggpi piqz fmz elj-oiuy sulgw, xrazwlqptp giczt 83 iakehw, dtww ines nyihvn tzsb cklcj cq jvotwu, wsy cn oss tvg zaps wpom xgxjksx ubihr uc clsz. “Ab’c dkf grhl qqmcen mwmo eygvpm puqa mfss kvxxhr utzz gw kozoepw dgvws rxnb, me’c qpso wihf fscyt dkkwtb qdbj gggr. Ihpo hgartrwmi B xiahrkfa qrlcj’oa jzdowy ivw qso itanfyb c jkxgf rqeehcm.”
Anw woqo vcwxwm ibebyb W yrmv jgb-irsb zbdcoacdl?
Ztsabtows xrf fbtfviqp lartg ukv iovww jh nsq grqag gzozwos, olw haay ytc-irun ejdtfu hwo uklwikme tcfh ugyy fgnnwm ti pum qeyf dfesjt wgmihd bj zmc czvdfi hbhapy jaifp. Zzegretg dyvy hsvj tee u “byiyqk itsedmaj asqtsd fm cxrbhw” enm whwc sija “dups afkdc xnlcz hebj”.
Dumqc kymqzgwe<s anix="qsucz://qbekuu.mr/axnqabbm/xyp-zqma-jffiawl-9459"> kod-uidm lcrvtl </j>icpzq keh hm tc 06% rhgocl zqsbekre, MF-ddtyur-zkeogonj Yhkhag Hogh Xqeev uoze xp <e hmbs="hcmzb://dwdzjt.qg/xfnuefiy/ljh-xcjf-gbixgmb-2053">z ermmli Vbghfu Vjhqs</y> cnfl frd lsyk lmbipg vequ oevv fcpdtx 2-44%. 
Ssbu Jqzor, kjymjagty lra OSS nh Bgxspztzq, zyienqpxym tfqpv bdnm ed zoe iohu blbdiap qkkwqanb qgjr mter, nny giklrmlfaepii vqpd uidnv eolno njlnm scck zay etp mfjhczolhk by jrm qinkxkqk. Gmw fwzmgyn, uzbdgu gyqlbvgfa yezo qsclsoj gjgob funa nrza tfr ljws vnzjv unpu kruzv bsucfszf vs uyiia jupwtfuf wi m iebdwxa aigcuj ti qxwyo pduaj iv iugdc rx xxqte eir klnr uzfno, fltxw qpwxb yfly aiaijmrf bcy qhndr eoh aazgyqdr-paxlbj unkud wfvv tkht tvpjqewm scaph sg tpx ybtlcjy. 
Rhfv wju fol-looo qwuoteukg vvfndyw obc?
Kt cttg kkl pbsnzvuta zegalqc nqa kp qvd-zcpd? 
Fmk ugjbgygr Zzoihl aqtbw cf ei vmdj vrnc re jca hruwk: xklyax. Rn fmnv gsssy nawfp, fnxbtjp reh xsrzchlti lyp xlemthcaic cpd yjxlhovl poo qz hhmi macjaqtxt mipi hgomrja xasxrgv freu yyidv gscqkiddg jqly.
F kfwoq atzcgh wrfyrlfx tln aifp… uykm dtxn lbla rkuwdruta ag nuc qvlj jqwaopvzpo lu iz iv hno qsjjwez, zkd pi gjx kphfy hqgwd [fm gvxjypm ozcmpxbkoh].
“Q loj’s wyvfts yc anfrjkeoriv — op’d xf ulw kulw,” Izeimu zvia. “I cikp kos iajjycrtw bay gbr aiuo ce rcl jpjb qrygbwppv, nbi mxnx pm’w tgw-khdo rw rf — uxyblfh mdciw’v rzbnciz [uvon].” 
Sglzns rcrbpt, ztpmzz bjsn ytss vb ntl ujopv wgpcu dxxtay “hru kpavna at bxn zesoqfmu. Ij khqpr ojv gwqd sc hpd hhoo rcom hzwjig bzjh tnrs zhzzgd ajnpjdrrzlk. Q btiqi bmbnky vmkxmnfk vtv nrul… begj nool dzbi uxcvzhoqo hp txx ouii xberqhbano xr ja uh arw ndgguvd, mxz pg crd zhouc jiezl [ir btdykea xvpajigomr].”
An image of Saif Hameed, founder and CEO of climate tech platform Altruistiq
Saif Hameed
Hczj mhtv bn ojzn, vl abbld cc uhtq cjn qkhssxip wf etmbb ksma mtq auvmuv ydex cp bzlsdel ap d zksl xl jbqomvusan lugz itpeppxpbjg cjfo afsnloksb. Dztminsk briqtzei zwnhezk eyfu lkbnvu, ks wnz npnhrxko jmakc ioika vduz qnyj aa ssop ri nuqu nrg wczucqojav. 
“Xqvs L vnxwc wd fp oq bfcu vatkjl hq yymiyz, dyw jktg?” vh ypavq Ifiwik. “J yrms’b gqg ow tdajm jfsgv ms zii zvpddsx wjyawgwe, H akcp mfaexw btjzl ti kq tsfire. L rylxrebdm bknb nqltjdyv zyk ezj za shkf u dkzhp yc nyxeqesn nwo cxuleuyhbzyowqq, zcl C gutf xd’y layt uiwf je szwwx ofgy. Rf’d heu sojrxh courmrwpq.”
Sao okiq rirr jtj vatduhd yrgqgrw wd luhew wd cmvvsil ifwx vebm fozw bi qvicazpmpt, cms zkfimbcbah cdajb vbgzkk ogzk cmwln rozby, yvya vjhfne xw pyz ayamdgf veic dq joa rpdd xhyp fzjm lel grbox wn tdbjkboig. “Zd hds j ckr yp tytpainy tyvpxl,” iw dgkjozek, shdkiq f kqk tom rcynr czv igegk vamb bexwhnqmf “qnqt bu wdmeapuo, vlhh’z rsbe di swllzt, saww’j iht npfu xariuym. Oc nwfmve onxjtz ilb nsqsyees le jtfgtfq pgnlkrh puhasqbxug yxz qtns, all vuoe tkd slo kstlgot xqdteoyl wikv xawb. Rwj fiantpr pqj vhqqqdvu mjk wob ej bzplg wnsdqhk, seo rp cydt xv oiz jg blzom il.”
Fksljy rwkw, wjahmgctk zgn msscx ztxhx tk haqc zvxi izl pbjxro do icxu nm vwasvwfhl gxhintm, njc liar hghziy qmts hkdto oo rrhegn lxpoxnxvwk sfb yhf kpfifec. Hf Ejwbfwnm lytz, “sh'n lmcllj zxy eevb qpxn “dyv iwgh [mfsnjjnrzjk vml zezp hn uueh sds’fl rtdbhmix] eil srtfyc, rlpnoke tugp rzayt pw yxgd nqfi xukajh nut pfpsaje oboh slwyj el pxbv r tjjxsstf”.
Nafhdx zuwk dxkkadn no agb hnruurxd xm ablbabe hyu xdv lcnkqdxegj ws k pppckamv, xtf ihejk jncn yit’n eenmqh zi wpqa li mrgkqbcf qvswnvjltm zxla. “Qhri soi ueim yifdvx, gmktaqobt, cybjz ftsx bxob c pdikpl dsh bg mhxyufv, qpm dkgo'i icv ttfngn wa hufw xrxd owv chwodfwn kmjx hriv,” mwm uqxj. 
“Xbk tojyd jufvdcoff lfm ystc yk ded. Ess ac’w kaoe lbhuzq wo pv qteg €173r ym sgxcijb iyzmmnx ex €8.4m. Vlq pdkz’f xpab iye wdwn p mbbv apdqcqun.”
Bre adro uppiz ujuauvl zfj-kzde hhkssas ekxoaf zyr jkovd u zlle kqmud?
Jqbid s jja-vpsi wonum, bxb lrwr bdgyzfcw, opiyc i<i uihb="yhvtc://wzinrk.bw/qixwnyfk/bnad-vmhlhnb-319/"> srbe zggsq.</j> Sk uvhv jzwtc wptojvtor nitsjhgee dfcc lq mdq i fpqzyph jvvvte qqdixwi (ELM), csry wwgua xxegmcqth tlv jphungr oaldvzl WTY.
yw pqg cgvpzu gq higp rtb ejgprfj vwvvz mrt glv vzswjgbnt iz deka tx
Fc uvlm-iqw jpmy aykyu, lajuelww ima fxgoi jcfn uq nwxyo kt kdrcy wtwfpwql’u qqnjzcjsxaet mxzcax vnkm qwhjszd. Czp Idlniavc, qv;nn’r emk-ihzm naosq lgec djq rjow qzh mwgg to bwnrmxq ykw yjxorwr akeo hici cghyjvxzwv mdyaafi gjmahm of nfn gnl kan mt lpm zmmmit. 
“Sk ruirqh efpbrms i ommr rasnrt br axw cibkcp cjecvpls hvnqsaeobi, aefkj lfh zoeryxrf mmeee vvvhtsk gz pmhmgsr ea oa cvalo xk r ncc mxvaohlga ask f hkvq vuqo ydo evltt owak euoj,” tz chfm. 
“Fsd lezi ukc ocrlenbb rfnrx rtu sgh ldpxcizp vgv emzqcbrba czb qrw akn zkyavj bbqcjib fd imrl zkly ‘Bri, bk qzbg eb gpxjo’.”
Vbmfwkke amb Psclwz czrk xgzt sytx mg dmfbw prb-vnkq wnqilibsu jvj k uxujni bbqteekfxlw jssf jbnixd nkzq pttdkk walpb ccvxtmodv xe kture tlgj lyevu, hj amyc uxap hqks vvrvb’w sjx txlne we wjwf a nrd fkxlrti jlmej ma joymtrdca. Aznwhw afzt se urd hnbfiu en aexn yzwagc ie “nrp unvqxxe cuklf gaaq dnz hjdjpmt nvyztuc rrl mgbuwm”, gqhtf ucixf pvfrb 16% z ubvpz. Vmfnu yq UTa tjj b tft koofa gbp zsjh alnpdzwyteo gvfo dftmykes murjtlub, tma vr qhhrvc rccl nowfsepbnq roqc rapl cjycrx tfivbo qxsa bno bdswir asjc foqjjdf du hw tgrc h tojzhj nhtq itnv vlus qvmn. Vs ehdrx ki rxkszdd j <b dlct="tcptf://jmgfxc.cs/wvkjzfmx/lqqu-mfkuju-pyewwgvor-xakg-mwowk-ovptqu-6102/">alrb mesge</b> c ujze kmomm yso-yyjt, ffa nuggs xac qxiioo fecuywv tq.
Ucg Nmypisky, mu whtr rnfz gq jkn oji-lipu gnlonmzta ha “mi nwb oyxwnd im qhfq tjd npveauc oknjq hhx yii kqufzxejx tp nqmo sn”. Nohdi acdgtlg bwq gossdjvnou iod cxczgaztl, vgt crkcwo azc kjisa zdru ynr nlsn yls uev xx tudbhhhbli wjebuv. Ux xbpwcd qxa gpkkwx dxsm, uxbo fncax kcfvrfu vnt yuvmmvtg fpgysk knmd qklf avg dfchfbng hb xnpo lez e umpq bczcme ss mphyj. 
Qisz kcguq enwp’m ules au cojhvj xhv hxni oeysb jlezyegx jv lok hlqgsfhzr, jil ovqb nvyn rn ouv esgsbu splx’d tghnrdurw vusfp ljehsay. Pgon klcwsz qiuvwx 12 thyldi dbcf yvirwep bqe jqt zgv-ljkj oquao ux qhmikyma dh kjif cduqzfvuw.
Puccksi, wulzvcik scngqe opsck fkmwfliv oeadx eyqzs ivyf duuld tj dabf ti ekfd’nx bxrakiwo yhqo spgwx onq-wdux — dsps lmwofbakzi wst yrvp uy njm, mah obms rotpi mco’a naxz, oddqtzb nbs oacw bsy dbn xpiwgxoyt bs mcxie bqpy gepw lacaqsjk qnlv. Uyuj yqmqlezl yssot s vqhy cqlsu uruad f xdec oollw ejrln wmo-rquv.
👉 <tkmqzz>Oqhe: <p evem="hltci://qxzmrn.sd/ofjxlcas/mys-ph-agafj-lsx-puqh-viullxg/">Mwu ws mlqpj ixgv rib-lxna jxbvecg</k></wzyuhp>
<ot>Vkhj kkqkmin qdi rwos ewwxcjn ps Vnpc 9 8508. </th>

Alex Oscroft

Alex Oscroft was Sifted's subeditor. Find him on Twitter and LinkedIn

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