Fusion Ventures revealed an fascinating report on the state of pre-seed in Israel in 2025. We at Remagine Ventures blissful to take part alongside fellow Israeli-pre-seed funds. I’ve waded by way of the information and needed to share the primary takeaways for founders who’re elevating or seeking to increase pre-seed rounds. It’s good timing as Carta and Idea Ventures launched related experiences on Pre-seed within the final couple of weeks so it’s a great alternative to check and distinction with the US and UK markets.
In a nutshell
- Pre-Seed is Nonetheless Very A lot a Factor: Offers are occurring. Cash is flowing. No groundbreaking information right here, however affirmation that even in these occasions, early stage remains to be kicking. Nearly precisely one 12 months in the past, I wrote a weblog submit on the rise in pre-seed rounds and it’s good to see it validated on this report.
- AI, AI, All over the place (However Is It Actually AI?): AI is the phrase of the day, the week, the 12 months, in all probability the last decade. The report highlights an enormous chunk of pre-seed ventures pitching themselves as AI-powered. However not all AI corporations are the identical and the report does a great job defining the variations.
- Israeli Pre-Seed Traits: Quick, Targeted, and (Barely) Smaller Rounds: Israel being Israel, issues are transferring shortly. Rounds are getting executed, however the report hints at a extra pragmatic strategy – perhaps barely smaller rounds, positively centered on very particular issues.
Is it actually AI for those who’re simply utilizing an API?
This “AI” factor. It’s the elephant in each Zoom room, the buzzword in each pitch deck. Fusion Ventures’ report, like most we’re seeing, reveals a dominance of AI-related ventures on the pre-seed stage. However not all AI is created equal.
Inside the pre-seed panorama, there two major classes of AI-related ventures:
- Core AI Improvement: This class encompasses ventures centered on basic developments in synthetic intelligence. These are characterised by the event of novel algorithms, foundational fashions, and core machine studying applied sciences. These ventures signify deep expertise initiatives, usually requiring vital analysis and growth, even on the pre-seed stage.
- AI-Enabled Functions: The vast majority of ventures leveraging AI on the pre-seed stage fall into this class. These corporations are characterised by the applying of present AI fashions, APIs, and frameworks to handle particular challenges inside vertical markets. The ‘Use AI’ vs. ‘Develop AI’.
This strategy is principally the applying layer: it focuses on leveraging established AI applied sciences to boost product performance, optimise processes, or create progressive purposes throughout various sectors. It’s essential to recognise that whereas these ventures capitalise on the present AI development, their core innovation could reside in market software and enterprise mannequin quite than basic AI breakthroughs.
Evaluating Israel with US and Europe
- Pre-seed valuations common $6.45M post-money (median $6M), with typical funding rounds starting from $825K to $1.5M.
- For pre-seed investments, greater than half of VCs now solely use post-money SAFE agreements.
- The construction of pre-seed rounds in 2024 reveals extra VCs collaborating with smaller verify sizes, whereas fewer angels are making bigger particular person investments.
- Earlier than investing, over two-thirds of buyers (each VCs and angels) require founders to decide to full-time work for a specified interval.
- Greater than half of pre-seed funding in 2025 went in the direction of application-layer AI options and vertical AI.
An image is value 1,000 phrases:
Pre-seed within the USA
Fusion’s findings are roughly in step with Carta’s ‘State of Pre-seed 2024‘ report revealed two weeks in the past, primarily based on primarily US knowledge. In US pre-seed rounds:
- Pre-seed exercise grew in Q1 and Q2 of 2024 however proceeded to say no within the 2nd half of 2024
- Regular valuation caps: Median valuation caps for post-money SAFEs have remained comparatively steady, 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 reduction
Pre-seed in Europe
Conveniently, this week Idea Ventures revealed ‘Zero to One’ a report centered on pre-seed exercise in Europe analysing knowledge from 2018 to 2024.
- 66% of pre-seed rounds had been executed in ASAs (Superior Subscription Agreements, the UK’s equal to SAFEs)
- The common pre-seed spherical is about $600,000
- The common variety of buyers per spherical dropped from 10-11 in 2020-2021 to 6-7 in 2024
- Common Pre-money valuation in UK pre-seed rounds stands at roughly $4.8M USD (£3.75M GBP)
Takeaways for Founders
My recommendation for founders is that the bar for elevating every spherical (seed, collection A) has risen and due to this fact the position of the pre-seed spherical or inception spherical is to assist the founders construct a powerful preliminary crew, construct their MVP and get their early traction going.
To minimise dilution impression, founders want to grasp what are the milestones they’re anticipated to realize and construct a finances for the pre-seed that permits them to get there.
Some errors to keep away from: keep away from elevating SAFEs on prime of SAFEs. You may different between SAFE and fairness rounds, however the dilution impression of a number of consecutive SAFE notes may be too nice.
Lastly, when fascinated about valuation, attempt to keep away from ego and goal for with the ability to double of triple the valuation of your startup between rounds. In the event you begin from an inexpensive worth, that shouldn’t be an issue. However founders that optimise for a excessive valuation of their pre-seed spherical, may discover it arduous to justify such a leap inside 12 to 18 months of elevating, so bear in mind.
I am a former basic companion at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google’s first bodily hub for startups.
I am additionally the founding father of Techbikers, a non-profit bringing collectively the startup ecosystem on biking challenges in assist of Room to Learn. Since inception in 2012 we have constructed 11 colleges and 50 libraries within the growing world.
