India has entered a new era since the beginning of the “Start-Up movement”. Every day, a new startup attempts to launch innovative products in the hopes of capturing a substantial chunk of its niche market. While idea generation, business planning, and market analysis are all crucial elements of the startup process, acquiring funding is likely to be the most significant hurdle an aspiring entrepreneur will encounter. As a result, it is critical for all the start-ups to be aware of and comprehend the current and future funding landscape.
What is pre-seed funding?
Pre-seed funding is the first round of funding that a startup gains to validate its problem-solution hypotheses, conceptual frameworks, and market growth.
Pre-seed funding is required to lay the groundwork for the business to begin operations and to ensure that the founders’ venture is feasible. This foundation is established by:
• By conducting surveys, research, and analysis, theories about customers, demand, and planned offerings are validated.
• Bringing in key players who can assist in the conversion of the concept into a fully-fledged firm.
• Register critical patents, trademarks, and intellectual property to future-proof the company.
Pre-seed funding is rarely enough to qualify for an official round of funding. It is, nonetheless, a key source of finance for some businesses.
When to apply for pre-seed funding?
It is critical for a startup to apply for pre-seed funding at the appropriate moment and in the right method to flourish. Because businesses at this stage lack traction or a completely functional prototype, investors must be convinced of the company’s long-term goal and ability to scale. It is possible that it will take longer than expected.
Are you thinking about starting a business and wondering how to apply for pre-seed funding? Or What are the eligibility criteria for pre-seed funding? Our team at CoffeeMug.ai is ready to assist you and guide you through the funding process with suitable mentoring and coaching.
Our dedicated team has summarized below eligibility criteria for pre-seed funding:
- To build a market-fit product or service with sustainable commercialization and growth potential, a startup must have a business plan.
- If you are planning to apply under the ‘Startup India Seed Fund Scheme’(SISFS), then in order to tackle the problem that has been identified, it is mandatory to use some technology in its core product or service, or business model, or distribution model, or methodology.
- Startups developing innovative solutions in areas such as social impact, waste management, water management, agriculture, healthcare, defense, etc. are given the highest priority by the Indian government when applying under (SISFS).
- Financial and business objectives must be clearly understood by startups. This covers the amount required, the company’s overall cost, and a projection of future earnings.
- To attract pre-seed funding investors in India, it is critical to complete all paperwork ahead of time without any delay.
- Before making the pitch, do significant research on the pre-seed investment ecosystem and the top investors.
- All legal and regulatory documentation, such as partnership agreements, incorporation papers, and necessary certificates should be prepared for the startup.
- Finally create a pitch and freeze your business plan, as you may start receiving calls from various sources of investors.
How to choose the right Pre-seed funding Investors in India for your startup?
Investors take a leap of faith in the startup when they invest in businesses at this stage as there is limited sales data. They will have to take chances and make judgments based on conviction and future potential rather than sales figures and earnings.
There are three main types of pre-seed funding investors:
- Angel investors— Angel investors contribute their personal funds into a potentially rewarding business and can mentor start-ups through their expertise and experience.
- Venture capital (VC)— Venture capital is a type of private equity and a form of finance provided by investors to startups and small businesses with long-term growth potential. It is typically sourced from wealthy individuals, investment banks, and other financial institutions. Crunchbase is a platform that provides information on investments and funding.
- Pre-seed incubators—incubators such as Advantage, Seedfund, StartupXseed, Incubate Fund India assist entrepreneurs in the early stages of their business development by providing co-working space, funding, programming, pro bono resources (such as free AWS credits), and credibility.
How can CoffeeMug.ai help you connect with investors?
CoffeeMug.ai is a global platform that assists you to get investors for startup for pre-seed funding. CoffeeMug.ai’s online tools and membership perks assist entrepreneurs in starting and expanding their firms by connecting them with a global network of industry experts.
FAQs
Q. How can I get pre-seed funding in India?
A. Startup India aims to provide financial assistance in encouraging developing businesses to form their base on initiating a small number of funds to perform their business activities. Some of the pre-seed funding platforms are:
- Unitus Seed Fund.
- Infuse ventures.
- Kae capital.
- Blume ventures.
Q. Who provides seed funding?
A. A large portion of seed funding comes from personal investors, mainly from sources close to its founders, such as family, friends, and other contacts. Typically, private investors contribute funding in exchange for an ownership stake in the company or a percentage of the earnings from a product.
Q.What is the difference between pre-seed and seed funding?
A. Pre-seed investment is used to demonstrate that your product meets a market demand, whereas seed funding is used to ensure product-market fit.
Q.Who are eligible for seed capital assistance?
A. Seed capital assistance is available to startups that have been authorized by the DPIIT (Department for Promotion of Industry and Internal Trade) and have been established or registered for less than two years at the time of application.
Q. Do I need a product for seed funding?
A. You need a minimum viable product (MVP) to attract investors in the seed funding round.
