If you are a founder currently in stealth or gearing up to raise your very first round of external capital in 2026, the current venture landscape can send mixed signals.
Recently, I was speaking with a prominent seed venture capitalist who told me point-blank that he “doesn’t believe in pre-seed.” His argument was that if a founding team isn’t strong enough to raise a $5 million minimum right out of the gate, it’s a negative signal about their capability and market potential. I might be biased, but I totally disagree.
At Remagine Ventures, our POV is the exact opposite. Today, it requires significantly less capital to start a company, and the strategic position of the pre-seed round has actually strengthened, rather than weakened.
Raising a massive $5 million priced round on day one before proving your core hypotheses isn’t always a badge of honor; in many cases, it’s a fast track to over-dilution. Instead of disappearing, the pre-seed stage has matured into a robust, capital-efficient launchpad.
To back it up with data, in this post I take a look at the state of pre-seed in 2026 and the trends founders need to know, drawing on Carta’s “State of Pre-Seed: 2025 in Review” and Silicon Valley Bank’s “State of the Markets Report H1 2026.” While both are primarily based on US data, for Israeli startups it is the closest proxy.
1. Capital is Concentrated, but the Pre-Seed Market is Resilient
While it’s true that the venture market has tightened, early-stage capital is still flowing to high-conviction teams. In 2025, pre-seed startup funding saw a 13% decline in the total number of instruments issued compared to the previous year, but the actual cash invested only declined by a mere 1%.
Throughout the year, U.S.-based startups successfully raised $10.4 billion across 50,316 SAFEs and convertible notes. What we are witnessing is a concentration of capital: fewer overall instruments are being issued, but founders are raising massive amounts within those rounds. In Q4 2025 alone, instrument volume hit a recent low, yet startups still pulled in $2.62 billion—a figure firmly in line with previous quarters.
2. The Unpriced Round is King
The post-money SAFE featuring a valuation cap (and no discount) continues to be the absolute standard for pre-seed funding.
You don’t need to force a multi-million dollar priced equity round from the start. Founders are increasingly raising larger sums of money on convertible instruments before ever switching to priced equity. In fact, the majority of early-stage rounds under $4 million in 2025 were completed using SAFEs or convertible notes.
3. Valuation Caps Are Actually Rising
If a VC tells you the pre-seed market is dead, the valuation data says otherwise. In 2025, valuation caps on SAFEs increased across deal sizes. For founders raising in the $250,000 to $1 million range, median valuation caps hovered around a healthy $10 million. For those raising between $1 million and $2.5 million, median valuation caps sat at $15 million.
4. Founders are Building in “Atoms”
Where is the pre-seed money going? While SaaS securely holds its place as the largest startup industry, there has been a notable shift toward the physical world. Hardware and biotech/pharma finished 2025 as the second and third largest industries by total cash raised. This is a significant jump from 2024, when hardware was third and biotech/pharma was fifth, showing that investors are eager to fund deep tech and life sciences at the earliest stages.
5. The Road to Series A is Longer
Perhaps the biggest reason the pre-seed round has strengthened is the new reality of the venture lifecycle. According to SVB, VC-backed companies are facing compounding challenges: revenue growth rates have slowed substantially, yet the revenue benchmarks required to successfully fundraise subsequent rounds are higher today.
Based on Carta data, while the ‘graduation rate’ to series A two years after raising a seed has improved, from 17% to 30%, the reality is that it takes longer for startups to get to the growth and revenue metrics expected of them in the AI era.
Because the road to raise is longer and graduation rates are lower, more companies are turning to extension rounds to cover runway shortfalls. This makes your pre-seed round critical. A lean, strategic pre-seed allows you to execute efficiently, hit those steeper Series A milestones, and control your destiny without the crushing pressure of a $5M+ seed valuation hanging over an unproven product.
For founders in stealth, don’t let the mega-seed hype discourage you. A highly focused pre-seed round raised on standard SAFE terms is a sign of capital efficiency and smart dilution management, not a lack of strength. If you are building something exciting at the pre-seed stage, we’d love to hear from you.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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