State of Pre-Seed: Q3 2024

Executive summary

In many cases, a pre-seed investment is the first outside capital that a startup brings in. It’s the first step in a fundraising journey that—if all goes right—might extend for many years and include many millions of dollars. 

But that first step comes in many shapes and sizes. 

For most startups, it’s a small one: In the third quarter of this year, about 42% of all pre-seed funding rounds on Carta totaled less than $250,000. The proportion of rounds that fall in this smallest size interval has been steadily rising during the past two years: Back in Q1 2023, just 24% of pre-seed rounds were smaller than $250,000. 

For other startups, however, the first step of the fundraising journey is a massive one. In each of the past eight quarters, somewhere between 4% and 5% of all pre-seed rounds on Carta have been larger than $5 million. Some of these jumbo pre-seed funding events have made headlines in recent years, as fledgling AI startups have gathered huge pools of capital to help power their vast computing needs. 

Overall, startups on Carta have raised more than 17,000 pre-seed rounds so far this year. And the size of those investments is just one of many variables that can shape what this earliest phase of fundraising life looks like for young startups. 

This report dives into the latest data on many key facets of the U.S. pre-seed market, including management fees, valuation caps, a breakdown of SAFEs compared to convertible notes, and a map of the states where the most pre-seed activity takes place. 

Founders in the early stages of their own fundraising journeys can access our cap-table platform for free through Carta Launch, which also includes tools to simply create and fund SAFEs. 

Scroll to keep reading, or download a high-resolution deck with all of the graphics, plus additional data on how fundraising trends compare across eight of the busiest industries for pre-seed activity in 2024.

Q3 highlights

• The rise of post-money SAFEs: In Q3, 89% of all pre-priced investments on Carta were structured as SAFEs. And 87% of all those SAFEs were post-money SAFEs. That’s a major shift from the start of the 2020s, when just 43% of SAFEs raised were post-money.  

• Nearly half of U.S. pre-seed activity is in the West: Startups based in the West census region raised 49.9% of all capital from pre-priced rounds over the past year, led by California’s 40.1% share. The Northeast is next in line, with 29.4% of capital raised.

• A slower quarter for pre-seed investment: Total capital raised in pre-priced rounds currently sits at $728 million for Q3, down 36% from Q2. That number will likely increase in the weeks to come as additional companies record transactions. 

Key trends

SAFEs

Convertible notes

Industries

The median post-money SAFE in the past year raised $275K at a $10M market cap. But in some industries, the typical SAFE deal looks very different.

Download the full report

View profiles of the eight largest industries raising pre-seed funding in 2024: consumer and retail, finance, hardware, health and biotech, media and entertainment, services and logistics, and software.