How to Raise Pre-Seed Funding in the UK: A Practical Guide for First-Time Founders

Raising your very first round of capital is one of the hardest parts of starting a company, and pre-seed funding UK founders chase is often the hardest slice of all.
There's no finished product yet, sometimes no paying customers, and you're essentially asking someone to believe in you and an idea at the same time.
Here's a grounded look at where that money actually comes from, what it costs you, and how to approach it without wasting months on the wrong investors.

Who actually writes the first cheque

Most pre-seed funding UK rounds are built from a mix of sources, not one single investor writing a big cheque. The three main channels are:

• Friends and family — still the largest source of money at this earliest stage for most founders. If you go this route, treat it formally: issue real shares, put terms in writing, and make sure everyone understands the money could be lost entirely.
• Angel investors and angel syndicates — individuals, often former founders or operators, investing their own money, sometimes pooling together through a syndicate. Angel networks across London and the wider UK are a common entry point.
• Pre-seed focused micro-VCs and accelerators — smaller funds and programmes like Techstars or Entrepreneur First that combine a modest cheque with structured mentorship and a cohort of other early founders.

Warm introductions consistently outperform cold outreach at this stage. Cold emails to investors convert at a low rate, so mapping your existing network for anyone who can make an introduction is usually a better use of time than a long list of unsolicited pitches.

The tax schemes that make UK pre-seed investing different

If you're raising pre-seed funding UK-based, two government schemes shape almost every serious conversation you'll have with an investor: SEIS and EIS.

SEIS (Seed Enterprise Investment Scheme) is built specifically for very early-stage companies. It gives individual investors 50% income tax relief on the amount they invest, up to £200,000 per tax year, plus capital gains exemptions. From the company side, you can raise a maximum of £250,000 in total through SEIS. To qualify, your company generally needs fewer than 25 full-time equivalent employees, gross assets under £350,000 at the time shares are issued, and it must not have been trading for more than three years.

EIS (Enterprise Investment Scheme) picks up where SEIS leaves off, offering 30% income tax relief with higher investment limits, and it's typically used once a company has outgrown SEIS eligibility or needs to raise more than the SEIS cap allows.

Applying for SEIS Advance Assurance from HMRC before you start pitching is worth doing early. It's a relatively short application, and having it in hand signals to investors that they'll actually receive the tax relief, which tends to speed up how quickly they're willing to commit.

Picking the right funding instrument

The legal structure you raise on matters just as much as who you raise from. A few common options:

• ASAs (Advanced Subscription Agreements) — commonly used alongside SEIS/EIS, since they delay equity dilution while preserving eligibility for the tax relief schemes.
• SAFEs — faster to close and popular with international investors, but they don't carry the same UK tax benefits, so they're generally better suited to rounds where investors are entirely outside the UK.
• Convertible notes — increasingly avoided in UK pre-seed funding rounds, since they tend to be more expensive to draft and add legal complexity that most early rounds don't need.

A simple rule that holds up in practice: use an ASA if SEIS eligibility is available, use a SAFE if your investors are entirely international, and skip convertible notes unless there's a specific reason to use one.

What investors are actually looking for at this stage

Because there's rarely much traction to point to, pre-seed pitches lean heavily on a few specific things:

1. A clear statement of SEIS/EIS eligibility, including whether you already have advance assurance.
2. A clean, simple cap table showing exactly who owns what, since messy ownership structures are a common red flag for investors.
3. A strong team narrative. At this stage investors are backing people more than a finished product, so being able to explain clearly why your team is positioned to solve this specific problem carries real weight.
4. A specific plan for the money. Vague statements about "growth" convert poorly. Investors respond better to a clear milestone, reaching an MVP, landing your first paying customers, hitting a metric that unlocks your next round.

How much to actually raise, and what it costs you

Pre-seed valuations in the UK are typically negotiated rather than calculated from a formula, and typical dilution at this stage lands somewhere around 10–15%. Hot sectors like fintech or AI tend to command higher valuations, while deep-tech companies often start lower given longer development timelines. SEIS and EIS eligibility can also support a higher valuation, since investors are factoring in the tax relief alongside the equity itself.

Grants and small government-backed loans, such as a Start Up Loan, can complement a round without adding dilution, but they're rarely enough on their own and work best paired with angel or accelerator money rather than replacing it.

The bottom line

There's no single formula for raising pre-seed funding in the UK, but the pattern that works consistently is the same: build real relationships before you need money, understand SEIS and EIS well enough to explain them to an investor, keep your cap table clean from day one, and raise a specific amount tied to a milestone rather than a round number. It's advice we come back to often at Entrepreneur Plus UK, because founders tend to relearn it the hard way otherwise.