Pre-Seed
Also known as Pre-Seed Funding, Pre-Seed Round, Friends and Family Round
Pre-seed is the earliest institutional financing round, usually raised before product-market fit on a SAFE or convertible note. In 2025 the median SAFE valuation cap was $7.5M for rounds under $250K and $15M for rounds between $1M and $2.5M, per Carta.
In depth
Pre-seed sits between angel capital and the first priced round. It exists because the cost of starting a software company keeps falling while the bar for a seed has risen. A 2025 seed needs roughly $1M in ARR or a product with real users, so founders need a bridge to that milestone. Pre-seed fills the gap.
The instrument is almost always a SAFE or convertible note, not preferred stock. Post-money SAFEs with a valuation cap and no discount became the standard in 2025, hitting 61% of all SAFE structures per Carta. The cap fixes the conversion price at the next priced round and acts as a soft valuation.
Pre-seed funds underwrite team, market, and wedge, not metrics. Many companies raising pre-seed in 2026 have no revenue, sometimes no product. AI-native startups in particular often close $1-2M on pitch decks alone, with founders coming out of senior roles at labs or large engineering teams.
Why it matters
Pre-seed is the highest-risk slice of venture and also the most opaque. There is no Form D filing requirement under $1M, no PitchBook coverage for half the rounds, and SAFE caps do not show up cleanly in cap-table data until conversion. Founders frequently raise pre-seed without realizing how much dilution stacks across multiple SAFEs once the priced seed lands.
For investors, pre-seed is where the asymmetry lives. A $25K check at a $7.5M cap returns the entire fund if the company hits a $5B exit. The trade-off is mortality: most pre-seed companies do not raise a seed, and many fail before any priced round happens.
Worked example
A founder raises $1.5M on a post-money SAFE at a $12M cap to build the first version of a product. Twelve months later the company closes a $4M priced seed at $20M post-money.
Pre-seed dilution: $1.5M / $12M = 12.5%
Seed dilution: $4M / $20M = 20.0%
Combined post-seed founder ownership ≈ 1 × (1 - 0.125) × (1 - 0.20) = 70.0%
Founder ownership after both rounds lands near 70% before option pool top-up. A standard 10% option pool refresh at seed would drop that to roughly 63%. Stacking a second pre-seed SAFE at a lower cap, common when founders extend the runway, would compound dilution further.
Frequently asked
How much do startups raise at pre-seed?
Most pre-seed rounds in 2025 fell between $250K and $2.5M. Carta's State of Pre-Seed shows median SAFE valuation caps of $7.5M under $250K raised, $10M for $250K-$1M, and $15M for $1M-$2.5M. Round sizes above $2.5M are increasingly common but often get labeled as seed.
What milestones do I need to raise a pre-seed round?
A defensible team, a clear thesis on the problem, and some early validation: a prototype, design partners, a waitlist, or domain credibility. Most pre-seed investors fund the team and the wedge, not metrics. Carta data shows median pre-seed team size has fallen to 2-3 people, with AI-native startups raising before any product exists.
How much dilution should I expect at pre-seed?
Dilution scales with round size. Carta's 2025 data shows median dilution around 5-6% for SAFEs under $250K, around 15-20% for $1-2M rounds, and over 23% at the $5M+ end. Stacking multiple SAFEs at different caps can compound dilution unexpectedly when they convert at the priced seed.
SAFE or priced round at pre-seed?
Post-money SAFE with a valuation cap only is the dominant structure: 61% of SAFEs in 2025 followed this format. Priced rounds at pre-seed remain rare because legal cost ($25K-$50K) is a meaningful fraction of a small raise. Priced rounds typically appear once round size crosses $2-3M.
Who leads pre-seed rounds?
Dedicated pre-seed funds, scout programs from larger firms, angels, and accelerators. Multi-stage funds occasionally write pre-seed checks to claim early access to a company. A named lead is uncommon at pre-seed; founders often raise from 10-20 smaller checks on a shared SAFE.