Pre-seed 101

Week 10: Getting your ducks in a row

As a second-time founder, there’s a lot that I am still learning in this new business I’m building that I didn’t have to deal with my first time around. For those of you new here, I started my first business, a DTC womenswear collection in 2018. I am now building my second business, a fashion tech company and documenting the process and learnings as I go. Because, this business build is a hell of a lot different than my first one.

One thing I didn’t do in my first business was raise pre-seed capital. The first business was bootstrapped with some additional funding support from immediate family.

This tech product though? We’re building it from £0 and going to raise every pound through investors. I have to be honest, the idea of raising from VC scares me a little — well, transparency, A LOT. Mostly because I’m foreign to the space and industry as a whole.

But VC isn’t the only way to raise. After tons of research and conversations with people who have great networks or careers in the industry, I’ve learned there’s a few ways to fundraise, and they feel way less intimidating. This, coupled with a few key take aways I got from the Female Founders Rise Fundraising panel I attended earlier this week, where VCs and Angels shared their hot takes on what they look for when raising.

F&F, Angels and Family Offices

Friends & Family are people in your network and extended network who might want to support you because well, you’re you. There’s a pre-established relationship there. Ticket sizes are often smaller, but in terms of approach, it feels the most accessible place to start.

Angels come in all shapes and sizes. They could be everyday people with a passion to invest in a certain type of industry or company, or simply because they love you as a founder. Some raises are structured as syndicates — you set a target amount, open it up, and multiple Angels each chip in a slice until you hit the total. Others are bigger Angels with ticket sizes upwards of £250k, operating more like a solo VC.

Family offices, my new favourite category, are organisations set up by high-net-worth individuals (not necessarily actual families, FYI) to manage a group’s investable assets. Often called “dumb money” because they have a lot to deploy but are less technical than VCs. What they want to see is simple: how will you make money, what will your earnings look like, and what’s the potential exit?

What do you need before you go out to raise?

This came up a lot on the panel, and it reframed a few things for me. At pre-seed, investors aren’t expecting a finished product. They’re looking for signals that you’re onto something real:

• A pilot, a waitlist, or a cohort of early believers who prove your concept even if you’re pre-revenue

• A minimum lovable (not viable) product. A.k.a something tangible they can see people want and are actually already using

• Advisors on your deck who add credibility and help back you up

These are the proof points. They’re what turn a pitch from “I have an idea” to “here’s why this is already working.”

How do you know what to value your business at?

Short answer: it’s an art, not a science. But here’s the framework I found most useful:

Start with how much you actually need. Standard thinking is 18 months of runway: 12 months to build and 6-8 months to raise your next round, and then work backwards from there. Pre-seed typically means around 20% dilution, so the maths follows from what you’re raising.

The panel made one thing very clear: it’s better to raise less at a lower valuation than to over-raise and end up in a down round. A down round is = where the next raise values you lower than the last, and that is something we all really want to avoid.

How to find the right Angels?
Angels invest in the founder more than anyone else. Think about your hook — you’re selling yourself the same way you are selling the product. So, being as compelling as possible on your journey and mission is essential because it’s relatable.

When researching, be precise and do the due diligence to know who you’re reaching out to and why they specifically might care about what you’re building based on what they have invested in previously.

It’s all about human connection, so make cold outreach as warm as possible. Be personal and make it personal. Reference something specific that you know about what they invest in, or something you saw on their LinkedIn.

And the best news? Angels refer other angels in their network, so if you get one in the room, they’ll often bring others in with them.

A Final Note

If you’re at a similar stage as me and starting to think about pre-seed, the one thing I’d take away from this week is: don’t wait until you’re “ready” to start building relationships. The raise starts way before you open the round. Start warm conversations now, get advisors in your corner, and collect your proof points.

By the time you’re pitching, you want people already rooting for you.

xx KP