How much should you raise at pre-seed?

The question of how much to raise sounds simple. It isn’t. Ask for too little and you’ll be back fundraising before you’ve hit anything meaningful. Ask for too much and your valuation won’t hold up, or you’ll spend money you didn’t need to. Here’s a framework for thinking it through.

The three things to get right

1. Raise enough runway (then add buffer)

Investors generally look for eighteen months minimum. Twenty-four is better. Fundraising almost always takes longer than founders expect, and running a second raise process from a position of cash pressure is one of the worst negotiating positions you can be in. Build in a buffer in from the start.

2. Know your valuation inflection point

What is the single milestone that materially de-risks your business and justifies the next round at a meaningfully higher valuation? That’s what you’re raising to reach. Work out what it costs to get there, add your runway buffer, and that’s your number.

This discipline forces clarity. It’s easy to build a wish-list of things you’d spend money on. It’s harder, but much more valuable to identify the one thing or things that unlocks the next stage of funding (and builds credibility with investors if you’ve thought about it).

3. Be honest about your current valuation

The ask has to be credible at your stage. I recently received a pitch deck from a company at TRL5 — early technology readiness, pre-revenue, pre-product-market fit — seeking a £60M valuation. That’s not ambition, it’s a red flag.

Work backwards from what’s justifiable now, not forwards from what you’d ideally like to spend. The two numbers often don’t match, and the gap between them is where investor confidence gets lost.

A note on round numbers

Round numbers signal confidence and clear thinking. An ask of £500k reads as “we’ve thought about this”. An ask of £1,053,125 — a real figure from a deck I received recently — raises different questions. It might be precisely right, but it actually undermines credibility as the only factor that investors can be sure of is that your actuals will likely be very different from your forecasts.

The underlying principle

Every pre-seed raise is an argument that you can reach a specific milestone that makes you more fundable than you are today. Make that argument explicitly. Investors will be asking themselves: does this amount get them there, and do I believe they can execute? The clearer your answer to both, the stronger your position.

Originally posted on LinkedIn.