How to raise pre-seed funding in India: step by step

Pre-seed is the first outside money a startup takes, usually before it has proof that customers will pay. It is small, personal and often slow, and most of it never shows up in funding reports.

This is the step-by-step version: where the money comes from, what to prepare, which instrument to use and what the trackers show. What investors check at pre-seed versus seed is covered separately in pre-seed vs seed: what investors check.

How big is pre-seed funding in India?

Pre-seed is a small share of the deals trackers record. Entrackr counted nine pre-seed rounds out of 134 deals in February 2026, against 56 seed rounds, and pre-seed took 0.31% of that month's roughly $2 billion of funding.

Inc42's half-year report put seed-stage funding at $478 Mn in H1 2026, up 18% on a year earlier, with a median seed cheque that held at about $1 Mn. Inc42 doesn't say whether pre-seed sits inside its seed figure, so treat it as the ceiling a pre-seed round grows into.

Both sources count rounds that are announced or reported. A cheque from an uncle or a former boss rarely makes the news, so the real pre-seed market is larger than any tracker shows. Sources: Entrackr, February 2026 and Inc42, H1 2026.

Where does pre-seed money come from in India?

Pre-seed money in India comes from five places: friends and family, individual angels, angel networks and angel funds, the Startup India Seed Fund through incubators, and pre-seed or micro VC funds. They differ in speed, cheque size and paperwork, so most founders combine two or three in one round.

• Friends and family: the fastest money and the most personal risk. Put it on the same paper and price as everyone else, so it doesn't complicate the next round.
• Individual angels: operators and former founders in your sector. They usually come through people they trust, which is why how to reach angel investors starts with warm routes.
• Angel networks and angel funds: they run application forms, screening calls and pitch sessions, and a lead investor can pull others into the round.
• Startup India Seed Fund Scheme: money routed through selected incubators, covered below.
• Pre-seed funds: small venture funds that write first cheques, often alongside angels. Check their stated stage and sector before you write.

How the Seed Fund Scheme fits

The scheme guidelines allow up to Rs 20 lakh as a grant for proof of concept, prototypes or product trials, and up to Rs 50 lakh through convertible debentures, debt or debt-linked instruments for market entry or scaling.

You apply online to up to three incubators in order of preference. The startup must be DPIIT-recognised and incorporated not more than two years before applying. The full checklist is in how to apply for the Seed Fund Scheme.

What should you prepare before you pitch?

Prepare five things before the first meeting: one milestone and the money it needs, a short deck, a clean cap table, the company basics, and a chosen instrument with draft terms. Investors at pre-seed are judging the founder, so a tidy, specific ask carries more weight than a long plan.

1. The milestone and the amount. Name the proof you will have when the money runs out, such as paying customers or a working prototype, and cost it month by month with a buffer.
2. The deck. Problem, why you, what you've built, early evidence, the market, the milestone and the ask. Keep it short enough to read on a phone.
3. The cap table. One row per holder, agreed with the register of members, with any promised ESOP pool or advisor shares shown.
4. The company basics. Incorporation, a founders' agreement with vesting, IP assigned to the company and, if you want the Seed Fund or a convertible note, DPIIT recognition.
5. The instrument and terms. Decide what you are issuing and draft a one-page term summary, so the first yes doesn't stall for weeks over paperwork.

A pre-seed round is sold on one milestone: say what the money proves, by when, and what that proof is worth to the next investor.

Which instrument should a pre-seed round use?

Most Indian pre-seed rounds use one of three instruments: an iSAFE, usually issued as compulsorily convertible preference shares; a priced round of CCPS or equity; or a convertible note. Each sets how and when the investor's stake is fixed, and each has its own legal limits.

Instrument	What the investor holds	Limits to know
iSAFE	Usually CCPS with a cap and discount that set the stake at the next priced round	Can't be redeemed; authorised capital may need raising
Priced CCPS or equity	Shares at an agreed valuation	Needs a valuation and a full share issue process
Convertible note	Debt that converts to equity or is repaid	DPIIT-recognised startups only; at least Rs 25 lakh per investor in one tranche; convert or repay within 10 years

Those limits come from a Bar and Bench analysis of June 2026. The detail on each is in iSAFE notes explained. Foreign investors bring FEMA rules into every option, so ask a lawyer before you sign.

How long does a pre-seed raise take?

No tracker measures how long a pre-seed raise takes in India, so plan for months, not weeks. The only official clocks are in the Seed Fund Scheme: an incubator's committee selects startups within 45 days of an application, and the first grant instalment is due within 60 days of the application.

Angel rounds run on the slowest investor's schedule. Ask each one early how their process works, whether a screening call, a pitch session or a partner vote, and when money would reach the bank. Keep enough runway that a slow close doesn't force a bad price.

What slows a pre-seed round down?

Most delays come from preparation, not investors: a messy cap table, an instrument chosen late, or a raise with no lead. Fix those before the first meeting and the round moves at the investors' pace rather than yours.

• No lead investor. Smaller cheques wait for someone to set terms. Find the person who will.
• Mixed paper. Family on one instrument, angels on another, different prices. Put everyone on one document.
• Unclear use of money. "Runway" is not a milestone. Name what the money buys.
• Founder paperwork gaps. Missing vesting, IP assignment or recognition certificates surface in diligence and stall closing.

Keep a short list of everyone you meet and send a monthly update to those who said "not yet". A "not yet" with a reason tells you which proof to bring back.

Questions

Where can I get pre-seed funding in India?

From friends and family, individual angels, angel networks and SEBI-registered angel funds, the Startup India Seed Fund Scheme through a selected incubator, and pre-seed or micro VC funds. Most founders combine two or three of these in one round rather than relying on a single source.

How much pre-seed funding can the Startup India Seed Fund give?

Under the scheme guidelines, an incubator can give a startup up to Rs 20 lakh as a grant for proof of concept, prototypes or product trials, and up to Rs 50 lakh through convertible debentures, debt or debt-linked instruments for market entry or scaling.

What instrument is used for a pre-seed round in India?

Common choices are an iSAFE, usually issued as compulsorily convertible preference shares; a priced round of CCPS or equity; or a convertible note. A convertible note is open only to DPIIT-recognised startups and needs at least Rs 25 lakh per investor in a single tranche.

How long does it take to raise pre-seed funding?

No tracker measures this for India. The only official clocks are in the seed fund scheme: the incubator's committee selects startups within 45 days of an application, and the first grant instalment is due within 60 days. Plan your runway assuming the raise takes months.

Sources: Entrackr, Indian startup funding jumps to $2 Bn in February on Neysa's mega round, 2 Mar 2026 · Inc42, Indian Startup Funding Slips 9% To $5.2 Bn In H1 2026, 30 Jun 2026 · DPIIT, Guidelines for Startup India Seed Fund Scheme · Bar and Bench (Madhavan Srivatsan, Emerald Law Offices), Convertible notes and SAFE notes in India: The dilemma, 9 Jun 2026

For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.