How to make the most out of your pre-seed funding round

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How to make the most out of your pre-seed funding round

Even though you have a great idea, the odds of receiving funding are usually stacked against you. Pre-seed funding rounds are a great way to get your company on the track to success.

If you’re in the process of raising pre-seed funding, it’s important to know that there are some things you can do now to ensure success when your round closes. You need to be aware that you don’t necessarily have a lot of money at this stage: Think about how much cash you need to get through the next 12 months and make sure that amount fits within the budget of your actual pre-seed round.

Start building your startup from day one, not when you receive funding

The best way to make the most out of your pre-seed funding round is to start building your startup from day one. Don't wait until you get funding to start building your team, or building a product, or anything else that's essential for the success of your company.

The reason why this is so important is because you want to start earning revenue as soon as possible—and even before then, if at all possible—so that when it comes time to raise money again (which it probably will) you'll have something tangible and real to show prospective investors.

A good way is to start with a business plan or pitch deck, which does initial market research and defines strategic goals.

You need to get the team together that can take your startup to the next level

Pre-seed funding rounds are a great way to begin building a company, but you need to realize that they're not just about the money. They're also about getting the right team together so your startup can take off and soar.

If you want to make the most of your pre-seed funding round, it's essential that you hire people who are a good fit for your startup as well as for each other. You'll also want to hire people who have experience in what they're doing and have proven themselves capable at their jobs before—so don't overlook anyone!

It's important that your employees enjoy working together; otherwise, workplace conflicts could arise later on down the line which could lead to some serious problems for both parties involved. If someone doesn't get along with another employee on staff then there might be conflict between them which could eventually result in one person leaving or being fired altogether due to miscommunication or other issues stemming from poor communication skills among coworkers (or even worse).

Don’t hire full-time employees until you truly need them

We've found that it's often more cost-effective to hire freelancers or contractors than full-time employees. This is especially true when you first start out.
You don't want to commit the cash and time needed for a full-time employee before you need them, but also don't want to be caught in an awkward position where you're scrambling on day one because everyone has been laid off. Instead, we recommend hiring contract labor for some tasks and part- time employees for others.

Hire a quality accountant

Your accountant is your partner in crime. He or she ensures that your company's books are kept in order and can help you determine how much money you need to raise. A good accountant will be honest about what the costs of running the business will be, so that you can plan for them accordingly.
So how do you choose an accountant? First, look at his or her past work experience—do they specialize in startups? If so, great! But even if not, there are still plenty of things to consider before deciding on an accountant. You'll want to interview them personally (a phone call or meeting) and ask:

  • What sets them apart from other accountants? What makes their services unique?
  • Do they have any clients who have successfully raised capital through crowdfunding platforms like SeedInvest or Republic? If so, what did those deals entail? Were there any unexpected costs along the way that could've been avoided by using another method like private equity financing instead? They can also tell you the difference between pre money vs post money.

Build a runway

A runway is the amount of time a company has before it runs out of cash and must either raise more money or shut down. A burn rate is how much cash you spend every month, while a balance sheet shows your assets minus your liabilities.

To calculate your runway:

  • Take how much you've raised in capital (the sum total) and subtract that from how much you need to fund the next 6 months or so (the number of employees you have plus any projected expenses).
  • Divide this figure by six to get an approximate number of months before your company runs out of money.

Don’t feel obligated to accept every pre-seed offer

In order for your business to succeed, you need people who are passionate about the product and want to see it grow.
If you are in a position where you can hire someone with experience in an area that is unfamiliar to you, it may be worth considering. However, if they don’t have the same vision as yours or aren’t committed enough to help build out your team, then it might be a waste of time and resources.

It can also be helpful if they are looking for a job so they know there is room for growth within their current role which will make them more likely to stick around once things start picking up (remember: startups run on passion).

Make the most out of your pre-seed funding round by working hard, saving money, and hiring strategically

The pre-seed funding round is a great way to get your startup off the ground. It's important to make the most of it by working hard, saving money, and hiring strategically.

When you're working on your startup full time and don't have much cash flow coming in, it can be tempting to spend all of your money on unnecessary expenses—or worse yet, hire someone for a position that doesn't actually need filling! Don’t do this! As much as possible try to save up some funds so that when you do receive your pre-seed funding round from investors they are used towards reaching milestones which would help take your company from 0 to 1 (or at least closer). You should also make sure any employees hired during this period are high quality ones who know how their role contributes towards achieving those milestones.

Conclusion

We hope this post has given you some insight into what it takes to be a successful startup and the most important thing to remember: the hard work never ends. If there is one thing we have learned from our experience with PreSeed, it’s that there are no shortcuts in life. The only way to succeed at anything is through dedication and determination! A fundraising consultant is highly recommended in any case to prepare your business professionally to successfully pass the pre-seed funding round.

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