Pre-Seed VCs The UK Shortlist
Visit our startup investor database for the full list of UK venture capital firms.
What came first, the seed or the plant? The Pre-seed! 😊 … A pre-seed VC will invest in ranges between 100K-500K. At this level of investment, it’s generally all about founders, market size and experiments.
As seed rounds have become bigger and require more proof of traction and product-market fit, a gap has been left for very early stage investors. This is for founders that have an idea and are testing things in an exciting market.
At this stage, the goto fundraising strategy for early startups used to be “love money” from friends and family and small business angels.
A better option than "love money"?
These options are a great character reference, a real proof that people believe in you. However you can get stuck. You can build a product, get a bit of traction but still finish in no man’s land. Absolutely nobody will know you in the VC world. You’ll have to stop everything to jump through the hoops of the seed raising process with all the required due diligence.
A Pre-seed fund will make you a part of an ecosystem from the start with investors and startups ready for your next steps. Although they are not generally as hands on as an accelerator or incubator, they can provide quality intros and have standard templates for term sheets.
If you add a Pre-seed VC to love money and business angel investments and you could have the perfect combo.
List of 25 UK based Pre-Seed investors:
Pre-seed VCs (websites, linkedin and twitter accounts)
| Id | Pre-seed VCs | Investor details | City | Country |
|---|---|---|---|---|
| 1 |  3 Sisters Ventures (2 contacts) | UK | London | |
| 2 |  Air Street Capital (more info) | UK | London | |
| 3 |  Antler (more info) | UK | London | |
| 4 |  Archangels (more info) | UK | Edinburgh | |
| 5 |  Battery Ventures (more info) | UK | London | |
| 6 |  Blackfinch Ventures (more info) | UK | Gloucester | |
| 7 |  Btomorrow Ventures (more info) | UK | London | |
| 8 |  Cardiff Capital Region (5 contacts) | UK | Cardiff | |
| 9 |  Chalfen Ventures (1 contacts) | UK | London | |
| 10 |  Cherry Ventures (more info) | UK | London | |
| 11 |  CircleRock Capital (more info) | UK | London | |
| 12 |  Clarendon Fund Managers (more info) | UK | Belfast | |
| 13 |  Concept Ventures (more info) | UK | London | |
| 14 |  DSW Ventures (more info) | UK | London | |
| 15 |  Earlybird Venture Capital (more info) | UK | London | |
| 16 |  Elbow Beach Capital (more info) | UK | London | |
| 17 |  Environmental Technologies Fund (more info) | UK | London | |
| 18 |  EQT Ventures (more info) | UK | London | |
| 19 |  Eterna Blockchain Fund (5 contacts) | UK | London | |
| 20 |  Exceptional Ventures (more info) | UK | London | |
| 21 |  Fasanara Capital (more info) | UK | London | |
| 22 |  First Minute Capital (more info) | UK | Strand | |
| 23 |  FirstMonday VC (2 contacts) | UK | London | |
| 24 |  Forward Partners (7 contacts) | UK | London | |
| 25 |  Fuel Ventures (10 contacts) | UK | London | |
| More investors... | Full investor database | All cities | All |
Click here for the full list of 618+ VC funds in the UK
London VC firms
Most VCs tend to be based in London and pre-seed VCs are no exception. However the world is changing. Zoom has become a usual tool for investor screening meetings and location isn’t as much a criteria anymore when you are looking for investment. We are also seeing more and more VCs opening in the North and West of the UK.
That being said, a large majority of VCs are clearly still in London, and it will be easier to gain access to higher valuations in the capital.
We've made a list of 2243 VC contacts that you can access here
VCs are not the only pre-seed investors!
Pre-seed VCs are just one way of raising very early stage funding. And venture capital funds will probably want to take the lead at this round, however, very often their investment will be a complement to one or two of the below investment options ⬇
Love money
Love money is seed capital that has been extended by family or friends to an entrepreneur who starts a business venture.
You know that old saying "love means never having to say you're sorry"?
Well, it's true. When an entrepreneur raises love money from friends and family they are doing so because their dream is worth the risk - but only if both sides understand what this investment entails beforehand. In other words: make sure everybody onboard knows the risks related to your business or you may make your personal relationships complicated in the future.
Angel investors
Angel investors are high-net worth individuals who provide financial backing for small startups or entrepreneurs in exchange for ownership equity. The funds that this type invests can take many forms:
- one time injections when startup cash is tight
- ongoing support as your company grows & expands into new markets
There can be crossovers between angel investors and love money, however with angel investors should come with less emotional ties and may be harder to convince.
Angel networks/syndicates
Some angel investors get together in groups or networks. This allows each angel investor to see more deals than they usually would on their own. It’s also a great way for angel investors to share the costs of sourcing and vetting potential investments.
For entrepreneurs, angel networks are a great way to confront your project to multiple investors from different backgrounds. These structures often do pitch events and one to one consulting sessions.
A lot of angel investors are previous founders themselves and will recognise your struggles. It’s a perfect place to get quality advice and start building your own network even if you don’t end up raising funds with them.
Startup accelerators
Pre-seed accelerators are a type of startup program that offer investment, mentorship and educational components, culminating in an event on demo day. These programs are generally cohort based and can last between 3 months and 1 year with the goal of helping startups get ready to raise VC funding.
Startup Incubators
Incubators or startup studios have been created to help you grow your idea with you. In the UK, we’ve seen 2 main formats:
Founder studios: These studios are looking for founders to run with ideas generally in a sector that they know well, and where they are confident about the roadmap and KPIs to optimize. Founders will also be able to share resources such as office space, accounting services, HR.
Corporate or University incubators: These incubators are often started as the innovation arm of large organisations or universities. The equity agreements are generally a lot lighter than founder studios as the main target here is to grow an ecosystem.
Crowdfunding
Crowdfunding is a type of angel network. You basically present your project to online platforms such as crowdcube or seedrs and offer equity in exchange for investment from individuals. Each investor will be hands off compared to a typical pre-seed investor.
For some reason, crowdfunding has this image of being easier for founders. However the required documentation and management of your investor community with updates is quite demanding.
Founder money
This isn’t always included as pre-seed investment but it is probably the most common way that founders fund the start of their business. If you believe in your project enough, it’s a good signal to other investors that you are prepared to put funds in yourself. However, you also need to remember that once you take on outside investment, the equity/cap table structure will probably make you the last person to get their investment back.
Believe in yourself yes, but if you’re planning on raising further funding be aware of your own risks.
What do you need to get pre-seed funding?
If you’re at this level of funding you are probably starting off in your business journey. You won’t have a long track record of sales or a strongly developed product. So it’s important to reassure potential seed investors with supporting information.
Do you really need a pitch deck?
There are debates on whether pre-seed pitch decks are useful. But, if you don’t have much to show it’s the minimum you should provide to convince investors. It’s also a great exercise for founders and it can highlight strengths and weaknesses that you don’t really see when you are head deep in the weeds of your business.
Some kind of prototype investors can play with
This can be an MVP, a clickable wireframe, a packaging, an ugly nearly functional piece of hardware. This is not mandatory, but it shows progress and will also stay in the investors mind for longer.
A clear plan of what happens next
Here, nobody is asking you to have a detailed day by day timetable for year 3. But you should clearly know and structure what you’ll be testing next. This is also a great way to regularly start updating investors: “This is what we’re planning on doing next”, Update: “this is what happened, so this is what we’ll be testing next”.
Get hold of our venture capital database with 206 VCs, 41 angel networks, 32 startup accelerators
What can you expect in a pre-seed funding term sheet?
You’ve navigated through all the investor questions. You’ve jumped through hoops and over hundreds of venture capital hurdles. And you’re so close from getting that very first pre-seed term sheet.
What will be inside ? And how far are you from really getting your pre-seed funding?
Term Sheet Basics
A term sheet is a non-binding agreement that shows the basic terms and conditions of an investment in your startup. Once everybody agrees on the details of this document, these are then used to create the contract that will tie all parties together.
All term sheets will start the same. Who are you (the business and the founders)? Who are the investors ? And when is everybody expected to complete the transaction?
- Company
- Investors
- Founder
- Completion date
Show me the money ! It's time for your investment offer
This is what you’ve all been waiting for : the investment offer !
A pre-seed investment offer will typically include :
- the number of shares
- the share price
- the percentage of the fully diluted share capital for an aggregate of [pound amount]
In this section you may also see a link to a cap table.
And some pre-seed investors will include further staged funding options depending on certain milestones being achieved by the business.
What else is the investor offering ?
Some investors (mainly VCs and accelerators) may try to differentiate themselves by offering further perks to the monetary investment they are making.
It’s quite common to see extra services like :
- Free desk space
- Free support for HR and accounting
- Mentoring
- Discounts on tools such as AWS or other SAAS products
Terms for current and future employees
Here we need to talk about ESOPs.
An ESOP means Employee Share Option Pool. It is a number of shares that represent a percentage of the company’s fully diluted share capital following the funding.
ESOPs have become quite popular and are a great way to incentivise employees to join and stay in the business for a long time. Most VCs and investors know this and tend to recommend an ESOP structure in their term sheet.
The percentage value of an ESOP really depends on the key employees that are missing in your business. So the % is quite flexible but will rarely be higher than 20%.
Who will be on the board of directors?
Obviously founders will be on the board. However lead investors will often want to get a say in any substantial decisions that the company will be making.
An example of this could be :
“any spending over £XXX XXX will require consent from at least one other non founding board member”.
Founder shares
This may come as a surprise, but often investors will add reverse vesting provisions for the founder shares.
Basically if you leave the company before X number of months, the investors can have purchase rights on your shares.
Other clauses
It doesn’t stop here!
Pre-seed VC term sheets then will list a series of clauses to control the company's future journey :
- Pre-emption :
This clause allows shareholders the right to participate in further investments in the company. This is based on their ownership of shares and is in no case an obligation.
It just mainly rewards early investors.
- Right of first refusal :
If a shareholder wants to sell his shares, then, with this clause, existing shareholders will have the right to buy shares before they are transferred.
- Tag-along
- Drag-along
- Information rights
- Good leaver / bad leaver / intermediate leaver
If a majority shareholder sells their stake in the company, then this clause allows minority shareholders to sell their shares with the same conditions.
If a majority of shareholders wish to sell their shares to a third party, then all other shareholders are required to sell at the same time.
This clause covers the information that the company will provide to the shareholders. This can be annual budgets, monthly PNLs, weekly catch ups etc.
What happens if the founder is convicted of gross misconduct, or fraud? This clause will cover all the eventualities of the founder leaving the business. Good ones and bad.
How do you even start?
Pre-seed funding is tough and we really hope this table will help you navigate the initial research phase. All of these pre-seed funding options are interesting, but they also have flaws and elements that you have to be aware of.
You'll also find a full list of UK venture capital firms. You can get immediate access to the VC database by clicking here.
| Pre-Seed Funding | When should you fundraise | What do you need? | Good for | Warning | Round size | Valuation (pre-money) |
|---|---|---|---|---|---|---|
| Love money | Idea | Lovely friends |
|
| Less than £200K | £500K - £2M |
| Angel Investors | Idea / At Launch | Pitch deck |
|
| Less than £200K | £500K - £2M |
| Angel Networks & Syndicates | Idea / At Launch | Pitch deck |
|
| Less than £200K | £500K - £2M |
| Pre-seed VCs | Idea / At Launch | A plan / solid team |
|
| £200K - £1M | £1M - £4M |
| Seed VCs | Product Market-Fit | £10K - £50K MMR |
|
| £1M - £3M | £4M - £10M |
| Startup Accelerators | Idea | Founders |
|
| Less than £200K | £100K - £1M |
| Corporate Incubators | Idea | Industry match |
|
| Less than £200K | £100K - £1M |
| Startup studios | Idea | Skill set |
|
| Less than £200K | £100K - £1M |
| Crowdfunding | Idea / At launch | Good story |
|
| £200k - £1M | £1M - £4M |
Frequently asked questions
How do pre-seed investors differ from traditional venture capital funds in terms of their involvement in the startup's development, and what specific advantages do pre-seed investors offer to early-stage founders?
Pre-seed investors distinguish themselves from traditional venture capital funds by engaging with startups at an earlier, more experimental stage.
They provide support during the ideation phase, offering mentorship and networking opportunities. In contrast, traditional VC funds typically become more involved at later stages, focusing on scaling and strategic decision-making once a startup has proven product-market fit.
The specific advantages of pre-seed investors lie in their ability to nurture founders through the early phases, offering guidance when the product is in its infancy and connections within the startup ecosystem.
While the article mentions the importance of having a clear plan for testing and progressing in pre-seed fundraising, what are the key elements or milestones that pre-seed investors typically look for when considering potential investments?
Pre-seed investors typically seek specific elements and milestones when considering potential investments.
These include a compelling pitch deck, some form of prototype or tangible progress (such as an MVP or clickable wireframe), and a clear plan outlining the next steps in the startup's development.
Additionally, investors may look for regular updates on progress, demonstrating the founder's commitment and ability to navigate the challenges of early-stage business development.
The blog post discusses various clauses in a pre-seed funding term sheet, such as pre-emption, right of first refusal, and tag-along. Could you provide examples or scenarios where these clauses might significantly impact the relationship between the startup founders and pre-seed investors, and how founders can navigate these terms effectively?
The inclusion of pre-emption, right of first refusal, and tag-along clauses in a pre-seed funding term sheet can significantly impact the relationship between startup founders and pre-seed investors.
For instance, pre-emption clauses, granting existing shareholders the right to participate in future investments, may affect the startup's ability to bring in new investors without the approval of the current investors. This could potentially slow down the fundraising process.
Right of first refusal may impact founders if they wish to sell their shares, as existing shareholders have the first opportunity to buy these shares before they are transferred. This may limit the founders' flexibility in managing their personal stakes.
Tag-along clauses, which allow minority shareholders to sell their shares under the same conditions as a majority shareholder, can impact founders by potentially tying their exit strategy to the decisions of other shareholders.
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