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The New Reality of Pre-Seed A Funding

Updated: Aug 4, 2021

Did anyone tell you that an idea is worth as much as the paper it is printed (written) on? Well, that holds true mostly. But what no-one is telling you is how much and how investors value the team and plan attached to the idea. Traditionally, angel investors could demand a fortune equity from the co-founders for offering pocket money for a few months. The risk for the angel is high, but the returns outrun the risks in the longer term.

Do you know at what age kids are recruited by coaches for professional sports excellence? 3-4 years of age, just when they have crossed infancy. Now, the mature investors have realized the hidden potential of investing in an idea at a very early stage and expediting the process of creating success (and money). If (1) an idea is flushed thoroughly by experienced co-founders, (2) with the endorsement from industry veterans (advisory board), and (3) there is a successful proof of concept, the pre-seed A valuations are actually mimicking the round A funding numbers. Many startups have successfully raised more than a million dollars for less then 10% equity dilution, because their idea was more than an infant, with powerful godfathers. A big fuel injection in the beginning would mitigate the divided attention of the entrepreneurs and command a higher probability of success.

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