How pre-revenue startups can raise funds: A step-by-step guide

Founders hear the term everywhere, then realize no one defines it the same way. So let’s answer the basics.

What is pre-revenue? A company is considered pre revenue when it has not yet booked recognized revenue from customers. You may have a prototype, pilots, signups, or letters of intent, but no recorded income.

What does pre revenue mean for investors? They cannot analyze sales efficiency or retention yet, so they look for proof in other places: problem depth, market timing, team capability, early demand, technical progress, and a clear path to the first dollars.

Pre-revenue meaning in practice: The bar shifts from financial metrics to milestone-based risk removal. Every bit of evidence that reduces market, product, team, or technical risk is your currency at this stage.

Another way to phrase it: what is pre revenue? It is the stage where evidence replaces revenue, and story structure replaces cohorts and CAC.

If you see prerevenue as a distinct game with its own scorecard, you will prepare the right assets and approach the right investors.

Across hundreds of pitches and many rounds closed, I run a simple sequence. Each step builds proof that stacks neatly for the next investor conversation.

Step 1: Clarify the problem and who feels it the most

Pre revenue funding starts with an undeniable problem and a tight customer segment. General pain statements do not move checks. Precision does.

• Define the job your user is trying to get done in one sentence.
• Identify the top three triggers that make the problem acute.
• Write a single, concrete outcome your product enables within 30 days of adoption.

Run 15 to 30 short, structured interviews with target users. Record the words they use to describe the pain, the workarounds they rely on today, and the boundary conditions that block adoption. This language will power your pitch, landing page, and outreach. It also tells you exactly who to prioritize first.

My team builds a one-page narrative from those interviews that reads like a user story, not marketing copy. The tighter that one pager, the smaller your first attack wedge, the faster your early evidence will appear.

Step 2: Turn the idea into investable evidence

A pre revenue startup must replace sales metrics with evidence. Aim to produce three to five of the following within 4 to 8 weeks:

• Design partner letters or signed pilot commitments
• A waitlist with qualified leads segmented by role and company size
• Prototype or clickable demo that answers the three hardest product questions
• A small alpha or beta cohort with defined success criteria
• Technical de-risking notes that prove the hardest capability is feasible
• A basic unit economics model grounded in today’s alternatives
• Market demand signals like inbound requests, RFP invites, or integration asks

The best signal is active use. Second best is clear, verifiable intent from credible customers. I prefer design partner agreements with dates, deliverables, and success metrics. They push your team to ship and give investors something tangible to reference.

Step 3: Choose the funding path that fits your stage

Not all capital is the same. Pre revenue startup funding can come from several sources, each with different expectations.

Pick one or two lanes to pursue first. A common pairing: angels plus a pre-seed fund, or accelerator plus angels. Grants can be layered in parallel if you have the right technical profile and patience for paperwork.

Step 4: Select the right instrument and terms

At prerevenue, I favor simple instruments that reduce friction:

• SAFE with a valuation cap and discount
• Convertible note with a cap, discount, and interest
• Priced equity rounds are possible but slower and heavier on legal work
• Grants when available
• Venture debt is rare at this stage

Key points to align:

• Valuation cap that matches your milestone profile
• Discount that rewards early checks
• Pro rata rights for meaningful investors
• Clear target raise size and runway
• No exotic clauses that complicate later rounds

Keep it clean. A messy cap table or unusual term can scare off future leads. I often advise founders to set one standard SAFE with a fair cap and move quickly rather than over-optimizing. Momentum beats perfection.

Step 5: Build a lightweight data room that answers the real questions

Investors do not need a novel, they need confidence. Package a lean folder with:

• Ten slide deck and a 1-page summary
• 12 to 18 month operating plan and budget
• Product roadmap and milestones tied to the next round
• Market thesis, segmentation, and initial ICP
• Early evidence: pilots, letters, usage, waitlist data
• Founding team bios and references
• Cap table, founder vesting, IP assignment docs
• Legal entity and any prior agreements
• Basic risk log with your mitigation plan

If you have a demo, record a 3 to 5 minute walkthrough showing the key workflow. Keep file names clean and short. Keep a version log so you can reference what changed after new insight arrives.

Step 6: Build a targeted outreach engine

Random meetings lead to random outcomes. Replace wishful thinking with a clear process.

• Create an investor list of 60 to 120 targets ranked by fit: sector, stage, check size, and historic interest in your category
• Track in a simple CRM or even a spreadsheet with status and next steps
• Get warm introductions first, then run thoughtful cold outreach in sprints
• Send short monthly updates to people on the fence

Cold email template that gets replies:

Subject: 2-min intro – tackling [specific problem] for [specific user]

Hi [First Name],
We are building [product in one line] to eliminate [pain] for [ICP]. Early signals:

• [Pilot or design partner detail]
• [Prototype or technical milestone]
• [Waitlist or quant signal]

Raising [amount] on a [SAFE or note] to hit [three milestones] over [runway months]. Worth a quick call?

Best,
[Your Name] [Link to deck] [Link to demo] [One-liner]

Keep it focused, specific, and verifiable.

Step 7: Structure a pitch that converts meetings into diligence

A strong deck for pre revenue looks like this:

1. One-line problem and outcome
2. Who feels the pain most and why now
3. Your product and what is unique
4. Early evidence that proves demand or feasibility
5. Go-to-market wedge and how you win the first 100 customers
6. Business model with unit logic
7. Competition and your durable edge
8. Team and why you can make this real
9. 12 to 18 month milestones tied to use of funds
10. The raise: amount, instrument, cap, and who is in

Rules I live by:

• Lead with the problem and who screams the loudest about it
• Show rather than tell with a short demo or product visuals
• Quantify your wedge. Vague land grabs stall investor imagination
• Address the biggest risk before they bring it up
• Know your numbers, even with no revenue: market size, implied ACV, adoption rates, CAC guesswork based on today’s channels, and funnel math

Step 8: Run diligence and closing like a professional

Pre revenue rounds can still collapse if closing is sloppy. Treat closing as a project with owners and dates.

• Share a short calendar with all target close dates and milestones
• Use standard docs and a single link to the latest version
• Set expectations for weekly updates during closing
• Keep a FAQ with crisp answers to repeating questions
• Bring in counsel for final terms and cap table checks

After a soft circle of 60 to 70 percent, push for a hard close date. Social proof matters. Name committed investors with permission, and share when you hit material milestones during the raise.