The realm of pre-seed rounds has witnessed tremendous growth in recent years, with notable examples like Kindred Fund III, a $130 million fund dedicated to supporting tech startups in their quest to raise pre-seed rounds. Additionally, London-based pre-seed investor Playfair Capital announced its third fund, totaling $70 million, aimed at backing UK and European startups.
This surge in pre-seed funding signifies the rising prominence of these early-stage investments. Pre-seed rounds serve as the initial capital infusion for startups, often sourced from personal savings, loans from relatives and acquaintances, or funds generated through previous successful ventures for seasoned entrepreneurs. These rounds represent the earliest phase of financing, attracting active participation from numerous venture capitalists, positioning investors at the forefront of emerging groundbreaking ventures.
Experts suggest that seeking pre-seed funding at the earliest opportunity after a company’s launch is advisable. In fact, many founders commence their search for pre-seed investors even before officially launching their businesses. This trend is particularly pronounced among founders who lack significant personal funds, as they strive to secure a pre-seed round within six months of incorporating their company.
For pre-seed and seed-stage founders, a mix of excitement and concerns is commonly experienced in relation to their startups. At TFN today, we spoke to some early-stage startup founders to find out some common areas that both inspire and worry founders at this stage.
Dave Ranyard, Founder and CEO, Dream Reality Interactive
A notable figure in the virtual reality (VR) and interactive entertainment industry, Ranyard is the Founder and CEO of Dream Reality Interactive, a UK-based studio specialising in creating immersive and interactive experiences using virtual reality, augmented reality, and mixed reality technologies. Dream Reality Interactive focuses on developing innovative games, applications, and experiences that push the boundaries of storytelling and user engagement.
Most excited: I am seeing a lot of interest and fomo in the new Apple VR headset – I can’t wait to see what impact this has on the landscape of immersive technology and entertainment.
I am also excited to see where the BC/NFT/WEB 3.0 space goes following its deflation earlier this year – I think the correction was justified and I hope it has reduced the noise so that we can focus on what works now.
Most worried: Investment is definitely damp and this could cause a significant slowdown in innovation and growth. A lack of stability in global economics brings caution to businesses and risks the progress of innovative projects.
Toby Heelis – Co-Founder and CEO of Virtuall
Toby is an experienced MD, CEO and marketing professional in the luxury hospitality, technology and travel sectors. Toby and his co-founder Alan Newton won PPA Innovation of the Year for Eventopedia in 2015 – within a year of setting up the business. Virtuall is transforming any industry through the creation of innovative products that connect the world in a sustainable and profitable way. Products include E X P L O R E, and Eventopedia.
Most excited: The accelerated technology adoption that was caused by the pandemic is still in its infancy. Engaging and authentic content is more important than ever to tell your product story online. This creates great opportunities for creative and original technology companies.
Most worried: The accelerated use of AI in content production and fake thought leadership is going to create more inauthentic noise than ever. Technology should be used to help businesses achieve more whilst using fewer resources.
Shankar Sivaprakasam founder of Eartheye Space
Shankar is a technology professional with a degree in Computer Science and Engineering from IIT, Kanpur, India, an Executive MBA focused in Strategy, Operations and Finance from the University of Technology Sydney (UTS), and a PhD in Innovation Economics from UTS. Eartheye Space offers a fully automated, with no human-in-the-loop, self-service satellite tasking platform, and a geospatial marketplace. They currently provide a sensor-as-a-service platform for satellite tasking. They are bridging the gap between demand and supply for responsive tasking while removing friction in the earth observation (EO) value chain.
Most excited: Innovative services such as ours have good traction in a short time since being introduced to the market when they solve real problems (vis a vis imagined) for customers. Customers still spend.
Most worried: Not everyone gets space-tech or the value of space-data in everyday decisions because the space industry talks within itself. This does not help companies like us who are lowering the barrier to value for everyone.
Simon Waterfall CEO Allocation.Space
Simon Waterfall has previously established various international ventures, including fashion house Social Suicide, consultancy studio Fray, and creative agencies Deepend and Poke, which he built alongside Iain Tait and Nicolas Roope. He is building a commodities market to power the commercialization of space.
Most excited: Glass half full, the on orbit ecosystem that is gearing up to meet the new era of post Starship. It’s more than a volume play, it’s a new market just opening up before us.
Most worried: Glass half empty, the Series A drought that is circling; stay down the shallow end of the pool and extend your runway to 24 months.
Layla Sargent, Founder and CEO, The Seam
In 2019, Layla came up with the idea for and founded The Seam, a marketplace connecting consumers or businesses with tailors to repair or alter clothes sustainably and reduce the waste from fast fashion. For most of her life Layla had her clothes altered and repaired by her nan, a professional dressmaker for over 60 years. After moving to London and living away from her nan, she quickly realised how difficult it was to find a local, trusted Maker with specialist skills to care for her clothes.
Most excited: Integrating AI to respond to customers needs with speed and precision. A customer might tell us: “I have a Chanel cashmere jumper that has been attacked by moths,” and our AI integration can recognise this request as a booking for invisible knitwear mending, which we’ve attributed to a few dozen Makers on our platform. Then our algorithm can filter those Makers to ensure they’re skilled to repair luxury garments, and finally assign the job to the Maker whose location is nearest to the customer, reducing the carbon footprint of the postage logistics.
Most worried: Wardrobe aftercare is quickly becoming more embedded into our everyday lives, and with this shift we are seeing increasing expectations especially when it comes to accessibility and transparency. As with any strong tech-based business, you have to focus on building something that will meet the needs of your customers a decade from now. For us this involves things like considering how we build a strong logistics network that will also be relevant in 10 years time..
Jerome Rush, Founder and CEO, Passive Eye
Jerome is a serial entrepreneur with more than 30 years of business and industrial experience having founded, matured and successfully exited businesses in the product manufacturing sector and previously developed products for search, interactive working, customer support, e-learning for professionals and a suite of SaaS video services in the IT sector.
Most excited: Without information, efficiency gains are impossible. After years of development, we are bringing a portable self-powered IoT device to market that gathers and provides vital information to track, monitor and protect field assets in the marine and freight transporting industries – a huge and grossly under-serviced sector. We have been granted a United States patent and what excites me is obtaining our European Patent for our self-sustaining energy management technology.
Most worried: What scares me are events outside our personal or collective control such as the war in Ukraine, another pandemic or something else that makes the market even more reticent about adopting innovative solutions to solve existing business problems.
Robert Steele, Founder and CEO, The PIPE Company
Robert has spent the last 20 years in and around start-up companies either as founder, co-founder or ‘first person in’. Over the last eight years he has worked in and around early stage incubation and funding projects, particularly in the EU University sector. Previously Rob has managed to exit two businesses, one to Exxon and the other to IBM both from a start-up position and has created EIS/SEIS investment funds to support university projects and local knowledge transfer opportunities.
Most excited: I’m most excited about the increasing scope of the opportunities we are seeing to help universities deliver more commercial, social and environmental benefits from the results of their research. This is clearly a growing opportunity in the UK and the EU, with increasing budgets, and where our platform offers significant benefits.
Most worried: I’m most worried about the fragmented nature of the overall legacy approach from universities and researchers as well as limited bandwidth, coupled with a lack of urgency that some universities and investors show when it comes to change and taking action to improve the situation.
Nick Singh, Co-founder, Jrny
Co-founded by Nick and Vincent Huber six months ago, the pair were frustrated first time buyers with a career background in private equity and investment banking. Jrny has since grown to a team of five, raised an institutional equity round with two reputable early stage Venture Capital firms (Jenson Funding Partners and Tenity), and has qualified over £170m worth of pipelined demand.
Most excited: Fintech going mainstream: increasingly neobanks, alternative lenders and tech in finance is becoming mainstream and getting the attention of the major players in our segments.
Most worried: Broad regulation applied to the fintech industry in the UK, that isn’t always fit-for-purpose, as a reaction to events in the markets (e.g. the Silicon Valley Bank collapse)
Mel Sinjakli, Co-owner, My Baker
Started by two city professionals who quit their careers to pursue their passion for cake making, Mel joined the company in 2019. Having helped to build the customer base, she and her husband Mark acquired the business in June 2020 – going from being a baker to the co-owner of the company. Since taking over the business, and are in the process of expanding it across the UK, having raised venture capital funding.
Most excited: We’re most excited about the market for bespoke cakes, which seems robust so far in spite of the cost of living crisis, perhaps because the people who go for a bespoke cake tend to have some degree of wealth. Also the next day market – convenience and quality will always win through, and as distressed purchases they are less price-sensitive.
Most worried: What we worry about is access to finance. We have great ideas and expansion plans, but in this environment finding the right investors to partner with is proving challenging. And, of course, rising ingredients costs remain a major concern.
