A Guide to Pre-Seed Fundraising for Impact SaaS Founders (Part I)

‍

Understanding the fundraising landscape can be daunting for Founders building mission-driven software-as-a-service (SaaS) startups. Here, we outline the nuances Founders need to navigate pre-seed fundraising from impact venture capital.

Understanding Impact SaaS

How do you know if you are an "impact SaaS" company? We define Impact SaaS as a company aiming to improve people's lives in a measurable way through its software solution. Often, Impact SaaS founders have: 

• Incorporated as a C or B Corporation
• Developed a product with high-impact 
• Large-scale growth potential
• A plan to reach profitability 

Crucially, as their revenue scales, so does their positive impact. Here are a few companies that fit into the early-stage impact SaaS startups category:

• Manual: A mental health platform for college students identifying as men
• BrightAction: Helping individuals reduce carbon footprints
• Motivote: Increasing voter turnout through behavioral nudges
• Percent Pledge: A workplace philanthropy platform

Pre-Seed Capital for Impact SaaS

Yes, securing pre-seed capital for your impact SaaS venture is possible. And, you need to be as strategic as possible when seeking funding.

Fundraising success hinges on identifying the right investors who align with your mission and vision AND are seeking to invest in the space a Founder is building. 

According to Carta, in the first half of 2023, more than  2,000 pre-seed startups raised almost $1.3B. B2B SaaS startups raised pre-seed funding more than any other startup category, taking home 38% of all pre-seed venture capital raised. 

Raising venture capital is incredibly difficult. However, there are effective ways to increase the chances of successfully raising capital. First, a founder must understand the mind of an early-stage investor. 

1. Identifying Investor Fit

Investors have specific criteria for the startups they fund, typically broken down into three key elements:

• Thesis fit: Investors may have niche interests - choosing only to invest in specific impact categories. Others invest more broadly in a particular category. For instance, one investor may only be looking for climate software solely targeting companies to reduce their carbon footprint. While another investor with a broader thesis may invest in any viable business in the category of future of work.
• Stage fit: Most investors target specific stages of a company, such as pre-seed, seed, Series A, and so on.
• Founder fit: Some investors only back second-time founders or those based in specific cities. Others focus on women-led companies or BIPOC-led companies. Understanding whether an investor has founder criteria may elevate or disqualify you.

For example:

• Satgana: Invests in pre-seed and seed startups (stage) across six climate industries (thesis).
• BBV Ventures: Invests in pre-seed/seed (stage) female founders (founder) across wellbeing, future of work/education, climate, and overlooked consumers (thesis).
• Backstage Capital: Invests in pre-seed through Series A startups (stage) led by women, people of color, and LGBTQ+ founders (founder) in all industries.

2. Fundraising Benchmarks

Before you chart your fundraising course, it's vital to understand the average fundraising metrics for your stage. This knowledge can help you set realistic expectations and build a compelling pitch.

Here are some key metrics and elements that investors commonly evaluate for SaaS companies:

3. Building a Fundraising Process

A well-structured fundraising process is key to your success. Your process should include:

• Clear Goals and Non-Negotiables: Define your goals and your fundraising deal-breakers.
• Realistic Timeline: Raising a pre-seed round typically takes 6 to 9 months.
• Building a Pipeline of Investors: Prepare to meet with at least 100 investors before closing your round.
• Time Commitment: Dedicate at least 20 weekly hours to fundraising for approximately four months.

4. Find Good Investor Databases and Lists

Finding the right investors can be challenging but essential. Thankfully, numerous investor databases and lists can help you identify potential backers. Here are some helpful resources:

• Signal
• Visible Connect
• First Round Angel Directory
• Pre-Seed VC firms list

Founder specific:

• List of Accelerators and Investors Supporting Underrepresented Founders
• 60+ Top VC Funds Investing in Female Founders by BetaBoom
• 50+ Investors and Funds for Female Founders by Atto

These platforms provide valuable information on investors' backgrounds, preferences, and portfolio companies, allowing you to target those who are the best fit for your impact SaaS venture.

–

In Part II of this series, we'll delve deeper into the intricacies of pre-seed fundraising for impact SaaS founders, including crafting the perfect pitch deck, mastering investor meetings, and navigating the fundraising landscape. Stay tuned for more insights on your journey to secure the capital needed to make a meaningful impact.

In the meantime, start building your investor pipeline, refine your business thesis, and get ready to embark on your pre-seed fundraising adventure as an impact SaaS founder. Remember, with the right strategy and perseverance, you can turn your vision into reality.

‍