From Idea to $341,000 - Four Lessons on Raising a Pre-Seed Round

We raised our pre-seed round in seven weeks during a bear market thanks to our team, amplifying angels, "free money," and our story. Use our lessons for your raise.


Scott Meyer
March 25, 2024

When we shared the news about our recent pre-seed raise, several aspiring entrepreneurs asked how we did it.

Today, we want to share Chipp.AI’s pre-seed funding journey. Over seven weeks, we raised $341,000 and uncovered four key lessons that every startup should consider when starting to raise funds.

Four Lessons from Raising a Pre-Seed Round

Sell the Team

We started raising money with an idea and a simple demo. Thanks to the hard work of Andre, we had a “sort-of-working” prototype and a story to tell. Sure, we had estimates and a vision, but our team was the most important asset we focused on.

With a former Amazon engineer, a Lang Chain AI whiz, and yours truly, an AI educator, we were a powerhouse of talent and passion. Our pitch was simple yet profound: "Invest in the people behind the idea, not just the idea itself."

This was prescient as we pivoted our idea during the pre-seed raise. Fortunately, our pitch was anchored on people, so it was not a problem for our supporters. In fact, some of our investors were not sold on our initial idea but were interested in investing because they thought we would find the right idea…which I think we did.

Find Amplifying Angels

Our initial fundraising was intimate, involving friends and family. But the tide truly turned when we secured the endorsement of a local community leader. His backing wasn't just financial—it was a vote of confidence, signaling to the broader community that Chipp.AI was a venture worth betting on. These "amplifying angels" create momentum, generating interest from other investors along with a sense of FOMO.

Source the "Free Money"

North Dakota, our home base, is incredibly supportive of entrepreneurs. We set our sights on the Angel Match Program, a state initiative that promised to match angel funds up to $250,000. This program created a path for additional funds and helped us with our fundraising because we could tell our investors their investment would be doubled. We set our goal at $250,000 with that program in mind. Ultimately the support generated thanks to the program meant we didn’t have to use the program!

This program wasn't just about the money. It provided local resources to amplify our impact. For startups everywhere, scouting for such "free money" opportunities is crucial. Whether it's state support, accelerators, or grants, these funds can supercharge your fundraising efforts, potentially without diluting your equity.

Sell the Story

After three weeks, I started sending a weekly update to our “circle of champions.” This list was friends, family, potential investors, and just people who care about us. It was an easy way to keep people updated on what we were doing.

Our first email was focused on our initial idea: Benchmark990. This was a tool that nonprofits could use to benchmark salaries based on tax returns. As we built this tool, we needed a payment solution that enabled pay-as-you-go. We shared the code and 150 developers downloaded the code in 24 hours. That’s when we knew the true product was a payment solution tailor-made for AI developers.

We decided to make a pivot. It wasn't just a business decision but a narrative shift. We kept our champions in the loop, sharing every twist and turn. As we were accepted to accelerators like Founder University, we shared it with our champions. We were generating momentum. By sharing the momentum, we were creating even more momentum.

When we raised $100,000, we announced the closing date for the round. We strategically decided to close the round the week after speaking at a local entrepreneurship event.

The combination of sharing our proof point of developers downloading our code with a deadline immediately led to investment. $75,000 was raised with one email, many of the investors had not even spoken to me. After speaking at the event, another $50,000 was committed.

The consistent communication combined with years of participating in the community built trust. In essence, years of work led to “overnight success.” Our investors were ready to join when the deadline arrived because it wasn’t new to them. Rather, it was a journey they had joined, and they now saw what we saw: a huge opportunity.

Your story is your most potent weapon. It builds trust, fosters connections, and can turn passive observers into passionate advocates. Start telling it now.

Key Takeaways for the Next Generation of Founders

Trust is Your True North

In the world of early startups, trust is your biggest asset. Every interaction, every update, every setback is an opportunity to build and reinforce trust. This trust is what is needed to attract investment and your first customers. Start cultivating it now.

Narrate, Don't Just Inform

Following the 'building in public' playbook, we shared our biggest updates publicly. However, we found a more personal touch to be the key.

We wrote emails with specific updates to the right people. These genuine interactions made our champions feel valued and involved. It's not just about sharing facts—it's about weaving a resonant narrative.

Community is King

Never underestimate the power of community. From local entrepreneurship hubs to seasoned angel investors, there's a community looking to support you. You need to ask.

Be clear about your needs, be genuine in your interactions, and watch as the community rallies behind you.

In every champion email, we share three ways they can help - including non-financial ways to help. When we speak in public, we give clear ways to join our efforts, like subscribing to this blog! 😎

Evolution is Essential

The startup journey is rarely a straight line. Pivots, setbacks, and course corrections are par for the course. Embrace them. Every change is a new chapter in your story, a testament to your resilience and adaptability. Celebrate your evolution, and let it inspire others.

In seven weeks, we went from an idea to a funded startup. Our journey is a testament to the power of community, narrative, and adaptability.

If you are looking to raise and have questions, or if you have raised previously, leave a comment and let us know what we left out.

A great idea and team is table stakes. Hopefully using a few of the lessons we learned can help you take that idea and team and convert it into an investment.

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