What Are the Stages of a Pre-Seed Startup?

In this video, we talk about different stages that a Pre-seed Startup goes through, right from Ideation stage to commitment stage and how the startup funds itself during this time.

0:00 Intro
0:34 Ideation Stage
1:35 Planning Stage
2:41 Commitment Stage
3:45 Pre-seed funding
4:51 Personal-debt funding
6:14 Triple F funding
7:13 Convertible debt and equity
8:01 Angel Investors
11:45 Crowd Investing

A startup always begins with an idea, and this stage for a startup is called the ideation stage.

When founders actually start working seriously on the this idea and start planning, it's called the planning stage. In the planning stage, a founder or founders will decide what their mission is gonna be, they’ll settle on an initial strategy, a potential revenue model, they’ll start thinking about company names and values that they’ll want to instill in their startup’s culture, and they’ll map out of a few milestones they wanna hit in the next couple of years.

Next is what we know as commitment stage, it's where some of the plans created during the planning stage begin to be executed. It’s the point in the startup’s journey where the venture is actually registered as a company, where the founders will sign a legally binding shareholder agreement, and the most important thing here, the building of an MVP (Minimum Viable Product) begins.

For startup which is planning to raise money, all these stages come under pre-seed stage.

At this stage, founder have very limited ways on how they can raise money. Initially, the venture will probably be self-funded - the founder or founders are gonna be building this startup during their spare time along with their job.

Another form of self-funding can be called personal debt funding, basically taking debt from bank to fund your startup.

Raising funds from external investor at this stage is hard since you don't have an MVP and that's why most founders raise money from family and friends. This could be in exchange of equity or could be a debt.

Two alternatives to selling equity directly to a family member or friend at an agreed upon valuation, and those are convertible debt notes or convertible equity. These allow family and friends to purchase shares in the company, but how much of the company they own isn’t decided until later on when other investors like angels and VCs invest too.

Another type of investor who may choose to participate in a pre-seed round is called Angel Investor. But angels see few things before investing in a startup. Firstly, many angels won’t invest in a single-founder startup. Secondly, professional and life experience matters here. If the founder or founders have attended a prestigious university or they’ve worked as executives or consultants, if they have leadership experience or product experience and especially if they have entrepreneurial experience then angels are definitely gonna be more likely to invest.

Thirdly, an angel investor will oftentimes invest based on the feeling they get from the founder or founders themselves. And then, angels see if the idea is even viable in the market.

The final type of investor for a pre-seed round is actually not an individual, but rather a crowd. It's called Crowdinvesting. It has a tangible ROI for these investors in the form of a fixed return if we’re talking about debt crowdinvesting, and platforms like Grip offer this.

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#startup #funding #business

[backstagewithmillionaires]

Follow Backstage with Millionaires to remain updated with our latest developments.

[tanmoysaha]

Full series please... In detailed explanation 🔥🔥🔥🔥🔥 your content is awesome and informative. Additionally please make a video on your back story

[yanpvuokikon]

Thanks for sharing relatable examples... helps bring so much clarity which enable us to visualise each stage and understand it! Cheers!

[supermom_nila]

Thanks for explaining clearly.. Need part 2 of this video..

[karthikranga]

Awesome video from the wonderful series! This is going to be a great playlist.
Watching my first video after returning back to India!

[drpmoqt]

very excellent communication skills (compliment)...brief, rich information for the people who have just an idea for business ...i mean the whole cycle of this startup thing and how it works....great coverage of the many states and their startups imparting useful information of the current business world. Thank you.

[VaishviBansal-wirg]

It was wonderful information that you shared!
Thanks dude

[reyanrahman]

would love to see a whole series great video

[rishabhshukla]

Kindly, make more videos in this series.

[parth]

Can you explain the revenue model of zepto? Is it commission based or subscription based?

[PortmannInternational]

Thank you so much for good content, very valuable topic covered

[harshadsubhash]

This is going to be a great series...please be as thorough as possible !

Please include some more statistical information if possible.

[yamlocal]

buddy this series is great just keep going
and please if possible increase the frequency

and an additional you make a comprehensive video on the new quick commerce startups like dunzo, zepto, instamart etc

please please i really want this one

[Ease_]

Really, your presentation and explanation is soo good 😊

[imohitgoel]

We have just created our MVP, what should be our next step as we will need funding to sustain as it’s a tech project ? Where should we aply for angels and VC?

[jojf]

Thank you so much for all the great knowledge!

[saikumar..]

Definitely i wanna see
And most of the people see but may be they are busy with other works of their own not commenting
So do the next video definitely

[tydical]

are you guys not gonna talk about cred acquiring smallcase?

[nareshmeetei]

I Love your content a lot. Thanks for giving so much knowledge.
I don't know about others, but to me those fake stock footages are very distracting. Sometimes they shift my focus to something else and I have to rewind the video. You can just show yourself talking. That would be more authentic. Thanks again.

[niranjanhgidwani]

Super video. Highly informative for someone who wishes to enter into this exciting area. Would it be possible to let us know what is the failure rate in terms of percentage. For example, if an angel investor invests a total of 100 in 10 different startups, is there any indicative figure as to, in how many of those 10, he actually loses out