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🌱 The New Reality of Raising a PreSeed Round in 2024

The VC industry is redefining "PreSeed" in the face of major market corrections

Author

Arjay Ruggles
July 11, 2024

Fundraising Tip of the Week

🌱 The New Reality of Raising a PreSeed Round in 2024

Camila Mendes Outfit Change GIF by The Chainsmokers

Per Charles Hudson (Precursor Ventures): Throughout the 2010s, there was a major spike in first-time funds, especially at the PreSeed stage, which saw historic round sizes and investment totals between 2019 and 2022. However, in the face of significant market corrections, the VC industry has shed its skin and adopted a new approach towards PreSeed investments. In today’s featured article, Charles Hudson, Managing Partner and Founder of Precursor Ventures, gives his take on the origins of these changes and what it means for founders looking to raise a PreSeed in 2024.

💦 Deliciously Juicy Takeaways

🕰️ Past

  • In 2015, pre-seed investments typically involved robust collaboration among various venture capital firms, focusing on rounds of $1 million or less for companies searching for product-market fit.

  • Many firms frequently collaborated on pre-seed cap tables, creating a vibrant ecosystem for early-stage investments.

🔎 Present

  • Many firms that were once frequent pre-seed co-investors have shifted their focus or become inactive.

  • Emerging funds that dominated pre-seed investing from 2018-2021 have slowed down due to strategic decisions or having exhausted their capital for new investments.

  • Certain investment categories, such as defense tech, AI, and deep tech, now require larger capital outlays, bypassing the traditional pre-seed stage.

🔮 Future

  • Investors are adjusting their expectations at PreSeed; many have stopped investing in pre-product, pre-revenue companies and instead optimize for post-product companies with some traction

  • As the industry adjusts to a more risk-averse climate, opportunities may arise in sectors that still value early-stage, high-risk investments, potentially redefining the pre-seed landscape.

Investors You Should Know

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Charles Hudson

Managing Partner,
Precursor Ventures

📍Location: San Francisco, CA
📈 Stage: Pre-Seed
💵 Check Size: $100K - 500K

Bio: Charles Hudson is the Managing Partner and Founder of Precursor Ventures, an early­ stage venture capital firm focused on investing in the first institutional round of investment for the most promising software and hardware companies. He invests in people over product at the earliest stage of their entrepreneurial journey. Under his leadership, Precursor Ventures has raised four funds and has over $175 million under management. He has invested in more than 375 companies and has supported more than 400 founders, including the teams behind Clearco, Juniper Square, The Athletic (sold to the NY Times for $525 million in 2022), Incredible Health, Carrot, and Pair Eyewear.

Fun Fact: He maintains close connections with his alma mater, Stanford University, and was awarded the 2021-22 Governors’ Award in honor of his exceptional volunteer service to the university as a board member and volunteer.

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