When most people start angel investing, they gravitate towards seed stage. It makes sense. At seed, there's a product, there's revenue, there are customers. There's something real to point at and analyse.
Pre-seed can sound reckless by comparison. Often there's no revenue, no product, sometimes barely a company. So, a lot of new investors quietly decide that's a step too far and stick to seed, where the risk feels more measured.
My best-performing angel investments came from pre-revenue, pre-product, pre-seed companies I backed very early.
I'm not saying that to be contrarian. I'm saying it because the instinct to wait for a product is the thing that quietly costs new investors their best potential returns, and I made a version of that mistake myself before I understood what I was assessing at that stage.
What stage do you prefer to invest at?
Here's the part most people get wrong about pre-seed.
They think investing pre-product means investing with no information. You're just assessing a different kind of information.
At seed, you're analysing evidence. Revenue growth, retention, unit economics, the numbers the company has already produced. The founder has built something and you're judging the thing they built.
At pre-seed, there's no “thing” yet, so you're assessing something harder to fake and, in my experience, more predictive:
How does this founder think?
How fast do they learn?
How deeply do they understand the problem they're solving, and is it a problem they're obsessed with or one they picked because it looked like a market?
You're backing a founder's relationship to a problem before the market has confirmed they're right. That's uncomfortable. It's also where the returns hide. By the time the evidence shows up at seed, the price has already moved to match it.
When I'm assessing a pre-seed company, the questions I keep coming back to are simple.
Does this founder understand something about this problem that most people don't?
Have they been living with this problem long enough to see round corners
And if they hit the first wall, do I believe they'll find a way through it rather than give up?
You can't answer those from a spreadsheet. You answer them from how a founder talks about what they're building, which is exactly why so many people skip the stage. It feels like judgement rather than analysis.
It is judgement. That's the skill. And like any skill, it sharpens the more pre-seed founders you sit across from, which is the real reason to start now rather than wait until it feels safe.
If you take one thing from this
Next time you meet a pre-seed founder, stop trying to assess the company, because there isn't one yet. Assess the founder against 3 things instead: how deeply they understand the problem, how fast they learn when they hit a wall, and whether this is a problem they're obsessed with or one they picked. If all 3 are strong, the absence of a product isn't a red flag. It's just early.
I go into how I think about stage as a first-time angel in this week's video, and why I'd back a blended approach rather than picking just one.
Warmly,
Rupa
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