Why do you need pre-seed funding?
For starters, every entrepreneur requires one thing before getting their business off the ground: capital or so you call seed. Without capital, the chances are a startup will fail before it reaches its product or service in the market.
The chances are you’ve heard of seed funding, but have you ever heard of pre-seed funding? Well, let’s start with what exactly is pre-seed funding.
Pre-seed as the name suggests is a stage before seed funding and is considered the earliest stage of funding. Also known as ‘family and friends’ funding. They are the ones who generally invest in your startup at this early stage.
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.
WHY DO YOU NEED PRE-SEED FUNDING?
Depending on the nature of your startup, it is most likely that some investors may not like to fund your company at such an early stage. So, this brings you back to your close ones, who support you with funds at this stage.
Without the appropriate funds, most startups already feel left out when competing with established brands. This stage is important for startups especially because it determines in construction of the company’s foundation.
A startup raises pre-seed capital to complete all the tasks that can help it makes its idea business ready.
· You need funds for hiring new staff members
· Finding an office space to work in better condition
· Marketing to those first few customers that will determine the future of your startup.
· These funds help you experiment with the offering, market, value, or problem.
· These funds also help you in prototype testing which is related to checking the functionality and visualizing the idea for the product or service.