Unpacking company investment stages to help find your fit
Part Two (of seven)
Pre-seed & Seed (The Early Stage Start-up)
In the second of our series of seven articles – in which we unpack the different stages of growing a business – we delve into the early start-ups. Namely, those at the pre-seed and seed round stage.
Flash overview: A pre-seed round is a pre-institutional seed round that either has no institutional investors or is a very low amount, often below $150k (approx. £106,500).
Seed rounds – commonly referred to as the “friends and family” rounds – are among the first dose of funding a company will receive, generally, while the company is young and working to gain traction and prove out the concept Round sizes range between $10k–$2M (approx. £710K–£1.4M), though larger seed rounds are common today. A seed round typically comes after an angel round (if applicable) and before a company’s Series A round.*
If a company has this type of backing, there’s a high risk that it doesn't have deep pockets to reach into if it’s burning cash. You should investigate how much runway a company has before signing on so you can calibrate the risk/return. You should also take the time to research the founder's background and past successes/failures and do a good old Google search to see if there’s any lawsuit history.
Who’s it for? Risk-takers and dream-makers.
What to expect: The concept is often fueled by the founder’s bold vision and often a decent dose of ego. This is generally required to combat early cynicism whilst providing the energy to launch something that does not yet exist. Everything in an early-stage start-up is small - limited capital, a few hands doing a lot of things, and a standing start. This reality requires you to be bullish, adaptable, and no stranger to burning the midnight oil. “Making sh*t happen” is your middle name but the upside is you also get to emblazon your mark on shaping purpose and legacy product.
About you… You’re a risk-thriving high-roller who plays the long game, knowing that, one day, you may reap the sweet, IPO-based rewards of your assiduous efforts. Your job description may not be worth the napkin it’s scribbled on but nothing will stand in the way of your journey to becoming the next tech unicorn. Or, so be it, you go down in flames along with 70% of all start-ups. But, dems the risks.
How you take your coffee: Black with an extra shot of kick-ass.
In a quote: “Risk more than others think is safe. Dream more than others think is practical.” – Edward Schultz, CEO of Starbucks
Flaming examples! MindLabs (£1.4M / about $1.98M) CIPIO ($2M), Fitterfly ($3.1M), Mindgram (€1.9M / about $2.3M)
Look out for the Part 3 in this series, when we delve into the the “classic” start up – those who have secured Series A funding.
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