Pre-Seed Funding in Germany: What Founders Need to Know
Raising your first round in Germany has its own rules. Here is what to expect at the pre-seed stage.
What pre-seed means in Germany
Pre-seed in Germany typically means raising between 100,000 and 500,000 euros to validate your idea and build a first version of your product. This stage is earlier than what many investors traditionally focused on, but the landscape is changing.
More angel investors and micro-VCs are now active at this stage in Germany. The checks are smaller than in the US, but the ecosystem is growing rapidly.
Where the money comes from
At the pre-seed stage, your most likely sources are angel investors, friends and family, public grants, and a growing number of pre-seed funds. Programs like EXIST from the German Federal Ministry for Economic Affairs provide non-dilutive funding for university spinoffs.
BayStartUP in Munich runs pitch events that connect founders with angels and early-stage investors. These events are one of the best starting points for founders in Bavaria.
What you need to raise
At pre-seed, investors bet on the team and the market more than the product. You need a clear articulation of the problem, evidence that you understand the market, and a credible plan for how you will use the money.
A prototype or early MVP helps, but it is not always required. What is required is demonstrating that you have talked to potential customers and that there is real demand for what you want to build.
Legal and structural considerations
Most pre-seed rounds in Germany use a GmbH (limited liability company) structure. Recently, convertible instruments modeled after the US SAFE have become more common in Germany, though traditional equity rounds are still prevalent.
Get a lawyer who knows startup financing. The cost of good legal advice at this stage is small compared to the problems that bad deal structures create later.