Understand what drives your pre-seed valuation and how to get it right

At this early point in a startup’s journey, there may be no revenue, no formal product, and sometimes not even a full team. Yet, despite this uncertainty, founders are still expected to define what their company is worth. 

This article explores how valuations are determined at the pre-seed level, what investors look for, and the tools and methods commonly used to guide early-stage pricing. We also take a look at the latest valuation trends in Europe and explain how instruments like SAFEs and convertible notes are used to navigate early negotiations.

Why is valuation important at the pre-seed stage

Valuation at the pre-seed stage might feel like guessing the future, but it matters more than most founders realize. Even though your startup is still in its early days of development, the valuation you agree on influences everything that comes next:

• How much of your company do you have to give up in exchange for early funding?
• How do investors and future partners perceive your business?
• Your ability to raise future rounds without facing a down round.
• The health of your cap table ensures you and your team keep enough ownership as the company grows.

Beyond the numbers, valuation is also about signaling. It tells the market how confident you and your investors are in your startup’s potential. A good valuation can show that you're thoughtful about growth, aware of your stage, and committed to building. 

A higher valuation means you raise more money for less equity, but it also raises investor expectations. A lower valuation might feel like you're giving up too much too soon, but it can create more breathing room for growth and future fundraising.

What do investors look for in this stage?

Maybe you’ve got a prototype or MVP, maybe pre-revenue, or perhaps you’re just now forming a team and testing your core idea. There’s a lot of ambiguity, making this stage more about your company's potential than solid numbers or revenue charts.

Investors at the pre-seed stage know this: Your background, clarity of thought, and ability to execute under uncertainty. Do you understand the problem deeply? Can you build the right solution? Can you recruit a strong team, learn quickly, and adapt? These are the questions they’re asking, even if they don’t always say them out loud.

What is a good pre-seed valuation?

There’s no universal “right” number, but pre-money valuations are typically between €500K and €3M, depending on geography, traction, and team credibility. While these numbers might seem low compared to later rounds, they reflect the high risk investors are taking this early on.

While in this very early stage you’re technically not setting a fixed valuation today, valuation still matters because of the valuation cap (and sometimes discount) that determines the price at which investment instruments convert into equity later.

Generally, founders at the pre-seed stage offer 5% to 15% equity, with 20% being the upper limit. If you’re raising between €10K and €500K, which is common in this round, that puts you right in line with standard pre-seed terms.

It’s tempting to push for a higher valuation to avoid dilution, but be cautious - setting it too high can make your next round (like your seed or Series A) harder to raise if you haven’t grown fast enough to justify the leap.

European valuation trends in pre-Seed rounds

In 2024, Europe's median pre-seed pre-money valuation rose to €3.3 million, nearly doubling from €1.7 million in 2023 and significantly surpassing the historical average. Founders raising at this stage are now operating in an environment where higher valuations are more achievable.

How to reach a pre-seed valuation?

At this early stage, most startups don’t have much revenue, or any at all, so traditional valuation methods like discounted cash flow, which rely on projecting future earnings, aren’t practical. Instead, investors focus on qualitative signals such as the strength of the founding team, the size of the market opportunity, product milestones, and early traction to anchor a valuation that reflects both potential and risk.

Common valuation methods at pre-seed

If you’re raising at this stage, it’s worth understanding how these approaches work - because chances are, your valuation will be influenced by at least one of them.

The scorecard method

The scorecard method is a structured way to benchmark a startup against others at the same stage. It starts with an average valuation (based on market), then adjusts up or down based on key categories like team, product, market, and traction. Each category is weighted, and the scores lead to a final valuation estimate.

The comparable company analysis

This method looks at recent pre-seed deals in your industry or geography. If similar startups raised at €2M or €3M pre-money with similar traction or product readiness, that becomes a baseline. It’s not perfect, but it helps ground expectations in reality.

Pre-money valuation at pre-seed level

Pre-money valuation is the value of your startup before any new investment is made. Here are some of the quantitative and qualitative factors that influence your pre-seed valuation:

• Team quality: Is this a founder-led team with a strong track record, deep domain knowledge, or technical expertise? Investors back people first.
• Market potential: Is the problem big and painful? Is the market large and growing? VCs want venture-scale opportunities.
• Early traction: Do you have users, customers, partnerships, or waitlists - even small ones? Any proof that people want what you’re building adds credibility.
• Product readiness: Have you built an MVP? Launched a beta? The more progress you've made, the more value you’ve created.
• Vision and storytelling: Can you clearly explain where you're going and how you'll get there? Confidence and clarity go a long way.

Post-money valuation at pre-seed level

Post-money valuation is the value of your startup after new investment has been added. It’s your pre-money valuation plus the amount of money you just raised.

So, let’s say you raise €500K at a €2M pre-money valuation. Your post-money valuation is now €2.5M. This number is important because it tells you (and your investors) how much of the company they now own. In this example, the investor would own 20% of your company (€500K / €2.5M).

Post-money valuation becomes especially important when using instruments like SAFEs or CLAs. Many of these will convert into equity at your next round’s post-money cap, which directly impacts how much dilution you take.

A higher post-money valuation might feel like a win, but if it’s not backed by traction or growth, it can cause problems in future rounds. Especially if your progress doesn't match the expectations that the valuation implies.

Typical pre-seed funding instruments

Because valuation is so fuzzy at this stage, many pre-seed deals don’t use priced equity rounds. Instead, they rely on more flexible tools like:

• SAFEs (Simple Agreements for Future Equity): A founder-friendly, no-debt agreement that gives investors the right to convert their money into equity later, usually with a valuation cap and/or discount.
• Convertible Notes: Similar to SAFEs but structured as debt, convertible notes carry interest and must be repaid or converted by a certain date.

Both instruments delay setting an exact valuation until a larger round (like a seed round), giving you time to build traction and increase your company’s worth.

>> Check out this SAFE vs CLA comparison.

Quick recap for the pre-seed level:

• Typical pre-money valuation: between €500K and €3M, potentially even higher
• Typical investment amount: €10K and €500K
• Typical equity offered: 5% to 15%, max 20%
• Fundraising instruments: SAFEs and CLAs

Use SeedBlink to prepare for your next fundraising round

As you start thinking about your next raise, especially at the pre-seed stage, having the right tools and support can make all the difference. SeedBlink helps early-stage founders navigate the fundraising process with confidence. Check out SeedBlink.