What exactly is pre seed funding vs seed funding? I’m here to answer those questions and show you the difference. Well, when you have found a business or a product that you want to take off with, you have to have some sort of funding to get you started. It does not just come out of thin air. You have to have some investors who are willing to invest in your product or business. This is where pre-seed funding and seed funding come into play.

Pre-seed funding is where most entrepreneurs start. Unlike major companies that have lifted off already, yours is just an idea stage or a product you have made that has the potential to be made into a profit. This is known as the friends and family stage. Where more often than not you ask friends or family that you know to help fund this idea, company, or product that you have. Although that is definitely a risk, so there are other friendly options. It is basically a loan from someone who has total faith in your idea, company, or product that you have nothing to show for yet. You are at the bare minimum with no equity to show. You are a pre-product company with a lot of risks. This is just the gateway to actual seed funding.

Now, seed funding is actually the next step. Where your business is actually starting to take off, and you have something to show for it. You start to look for bigger business investors. Your business or product has become viable. Furthermore, you have already got a team growing and supporting your idea. You now have a live product to show. Not only that, you are not as risky as you were in the beginning before you started showing a little revenue. You as a business owner receive capital or capital seed from an investor to fund your business or product that has taken off already. Well, somewhat.

These are basically the startups that start off a business. Pre-seed funding is basically the same as seed funding except you do not have a viable product it is just an idea and therefore you do not get as many funds whereas where if you do have a viable business or product you get more funding. Henceforth seed funding. Seed funding is where you have a viable product to show and have a clear-cut product-market fit. So bigger investors and bigger investments. These are both startup funding for a business.