Mar 12, 2025

Fusion Ventures published an interesting report on the state of pre-seed in Israel in 2025 . We at Remagine Ventures happy to participate alongside fellow Israeli-pre-seed funds. I’ve waded through the data and wanted to share the main takeaways for founders who are raising or looking to raise pre-seed rounds. It’s good timing as Carta and Concept Ventures released similar reports on Pre-seed in the last couple of weeks so it’s a good opportunity to compare and contrast with the US and UK markets. In a nutshell Pre-Seed is Still Very Much a Thing: Deals are happening. Money is flowing. No groundbreaking news here, but confirmation that even in these times, early stage is still kicking. Almost exactly one year ago, I wrote a blog post on the rise in pre-seed rounds and it’s nice to see it validated in this report. AI, AI, Everywhere (But Is It Really AI? ): AI is the word of the day, the week, the year, probably the decade. The report highlights a massive chunk of pre-seed ventures pitching themselves as AI-powered. But not all AI companies are the same and the report does a good job defining the differences. Israeli Pre-Seed Characteristics: Fast, Focused, and (Slightly) Smaller Rounds: Israel being Israel, things are moving quickly. Rounds are getting done, but the report hints at a more pragmatic approach – maybe slightly smaller rounds, definitely focused on very specific problems. Is it really AI if you’re just using an API? This “AI” thing. It’s the elephant in every Zoom room, the buzzword in every pitch deck. Fusion Ventures’ report, like most we’re seeing, shows a dominance of AI-related ventures at the pre-seed stage. But not all AI is created equal. Within the pre-seed landscape, there two primary categories of AI-related ventures: Core AI Development: This category encompasses ventures focused on fundamental advancements in artificial intelligence. These are characterised by the development of novel algorithms, foundational models, and core machine learning technologies. These ventures represent deep technology initiatives, often requiring significant research and development, even at the pre-seed stage. AI-Enabled Applications: The majority of ventures leveraging AI at the pre-seed stage fall into this category. These companies are characterised by the application of existing AI models, APIs, and frameworks to address specific challenges within vertical markets. The ‘Use AI’ vs. ‘Develop AI’. This approach is basically the application layer: it focuses on leveraging established AI technologies to enhance product functionality, optimise processes, or create innovative applications across diverse sectors. It is crucial to recognise that while these ventures capitalise on the current AI trend, their core innovation may reside in market application and business model rather than fundamental AI breakthroughs. Comparing Israel with US and Europe Pre-seed valuations average $6.45M post-money (median $6M), with typical funding rounds ranging from $825K to $1.5M. For pre-seed investments, more than half of VCs now exclusively use post-money SAFE agreements. The structure of pre-seed rounds in 2024 shows more VCs participating with smaller check sizes, while fewer angels are making larger individual investments. Before investing, over two-thirds of investors (both VCs and angels) require founders to commit to full-time work for a specified period. More than half of pre-seed investment in 2025 went towards application-layer AI solutions and vertical AI. A picture is worth 1,000 words: Pre-seed in the USA Fusion’s findings are more or less in line with Carta’s ‘ State of Pre-seed 2024 ‘ report published two weeks ago, based on mainly US data. In US pre-seed rounds: Pre-seed activity grew in Q1 and Q2 of 2024 but proceeded to decline in the 2nd half of 2024 Steady valuation caps: Median valuation caps for post-money SAFEs have remained relatively stable, sitting at $10 million for rounds between $500,000 and $1 million. 90% of SAFEs have a valuation cap and over half of them have a discount Pre-seed in Europe Conveniently, this week Concept Ventures published ‘Zero to One’ a report focused on pre-seed activity in Europe analysing data from 2018 to 2024. 66% of pre-seed rounds were done in ASAs (Advanced Subscription Agreements, the UK’s equivalent to SAFEs) The average pre-seed round is about $600,000 The average number of investors per round dropped from 10-11 in 2020-2021 to 6-7 in 2024 Average Pre-money valuation in UK pre-seed rounds stands at approximately $4.8M USD (£3.75M GBP) Takeaways for Founders My advice for founders is that the bar for raising each round (seed, series A) has risen and therefore the role of the pre-seed round or inception round is to help the founders build a strong initial team, build their MVP and get their early traction going. To minimise dilution impact, founders need to understand what are the milestones they are expected to achieve and build a budget for the pre-seed that enables them to get there. Some mistakes to avoid: avoid raising SAFEs on top of SAFEs. You can alternative between SAFE and equity rounds, but the dilution impact of several consecutive SAFE notes can be too great. Finally, when thinking about valuation, try to avoid ego and aim for being able to double of triple the valuation of your startup between rounds. If you start from a reasonable price, that shouldn’t be a problem. But founders that optimise for a high valuation in their pre-seed round, might find it hard to justify such a jump within 12 to 18 months of raising, so be aware.