British pre-seed investor Concept Ventures' principal Oliver Kicks advises startup founders to use the pre-seed funding to understand the core areas of their business.
He recommends the founders should deploy the capital raised during this round into hypothesis testing, building the core team, producing a minimum viable product (MVP), attaining a product-market fit (PMF), and accelerating R&D. Kicks recommends that founders raise more capital than required, taking into consideration a buffer amount, because "in most scenarios, founders will fail to reach the fabled PMF at first attempt."
- Dr. Marcus Erken, the co-founder of VC firm Sunfish Partners, recommends that founders should, by this stage, have a very clear idea about the "why" behind starting in the company, the problem they expect to solve, and the potential hurdles expected in the future.
- Marta Lacka, CEO and co-founder of Quantia, expects to allocate 50% of the pre-seed capital to developing the MVP, with the remaining 20% to 30% earmarked for operations and marketing.
- Per Sifted, startups raise between $100,000 to $1M in pre-seed rounds at an average valuation ranging from $500,000 to $5M.
- At the pre-seed stage, investors are investing in the company based on the founder's potential in understanding the needs of customers, building a team, and understanding the market, says Erken.
- Erken adds that startups should raise sufficient funding for 18-24 months of cash runway.
