The Ultimate Revelation of Seed Capital Vs Pre-Seed Capital

When you’re getting your business off the ground, the first thing you need to know and collect is funds. And for that, you need to understand the basic terminology of collecting funds for your startup to get your product out of the door. So, here is the ultimate revelation of Seed Capital Vs Pre-Seed Capital.

PRE-SEED CAPITAL

Pre-seed capital or pre-seed funding is that period in which a company is about to get off the ground and the funders are usually their close friends, family, or acquaintances. The goal of pre-seed funding is to demonstrate that your brand fulfills the market needs, unlike seed funding which serves the purpose of proving the brand market fit.

 

Depending upon the nature of the company it is most likely that some investors may not like to fund. So, this funding round generally involves the close ones. This funding stage can happen very quickly or may take a long period depending upon the initial costs of developing the business ideas.

 

Some of the important things you should know about this phase are:

  • Pre-seed funding amount ranges from $50k – $250k depending upon your product.
  • The normal valuation of this round is $1M – $3M, depending upon the industry.
  • The target runway can be between 3 to 9 months.
  • This round includes that you have created a minimally-viable product that works in some way and you’ve identified a clear market and a pathway to that market with your product.

SEED CAPITAL

Seed Capital or Seed Funding is the initial capital raised by any individual or a startup company. These initial funds help out to cover their startup costs like research, marketing, and business proposal. These investments are generally made by close friends, family, acquaintances, or by the owner themselves.

Seed capital is the earliest stage of the startup funding process. There are generally four rounds or series of investments a company can receive in total: seed, Series A funding, Series B funding, and Series C funding.

Some of the important things you should know about this phase are:

 

 

  1. ·       The funding amount that ranges is typically between $500k – $2M, depending upon the industry.
  2. ·       The normal valuation done by the investors ranges from $5M – to $15M, depending upon the industry
  3. ·       The target runway is about 12 to 18 months.
  4. ·       The typical investor of seed capital are angel and institutional investors.

·       Reaching this phase means that you’ve successfully demonstrated some kind of product-market fir and traction and most importantly you’ve assembled a high-quality team to build out the company.