Pre-Seed vs. Seed: What the Terms Actually Mean in Europe
In the European startup ecosystem, pre-seed has emerged as a distinct round between bootstrapped self-funding and institutional seed. Pre-seed in 2026 typically means €100K–€500K, raised from angels, accelerators (Antler, EF, Techstars), micro-VCs and friends-and-family. Companies at this stage are often pre-product or have a prototype with no revenue. Valuation caps run €2M–€6M.
Seed rounds in Europe sit at €500K–€3M with a clear lead investor, typically a dedicated seed fund (Cherry, Speedinvest, LocalGlobe, Northzone Seed, Project A) or a generalist Series A fund writing a smaller "scout" check. Companies have a working product, early revenue or strong usage metrics, and a defined go-to-market plan. Valuations land €4M–€12M pre-money depending on traction and geography (Berlin/Stockholm/Amsterdam outperform Paris/Madrid/Milan on valuation comps).
The line is fuzzy. Some founders raise a single €1.5M "seed" round at €8M pre-money; others raise a €300K pre-seed CLA and then a €2M seed priced round nine months later. The instrument and dilution profile differ significantly between these paths.
Instruments at Each Stage
At pre-seed, the dominant European instrument is the convertible loan agreement (CLA), often with a valuation cap and a 15–25% discount. SAFEs (the YC-originated equivalent) are common in UK and increasingly in DACH but face structural issues under German corporate law — see the [convertible loan agreement guide](/captable/convertible-loan-agreement) for the technical differences and the [convertible notes and SAFEs guide](/captable/convertible-notes-safes) for general mechanics.
Priced equity rounds are rare at pre-seed because the legal cost (€15K–€30K in Germany, €8K–€20K in UK) is disproportionate to the round size. CLAs and SAFEs close for €3K–€8K of legal cost in a couple of weeks.
At seed, the picture flips. €1M+ rounds typically close as priced equity with a new preferred share class. Lead investors want preferred shares with standard rights (1× non-participating liquidation preference, broad-based weighted average anti-dilution, pro-rata rights, information rights, one board seat or observer). Pre-seed CLAs convert into the seed priced round at the cap or discount, typically alongside the new investor's preferred shares.
Typical Dilution Profile
Pre-seed dilution: 10–15% for €100K–€500K raised on caps of €2M–€6M. Founders typically retain 85–90% post-pre-seed.
Seed dilution: 15–20% for €500K–€3M raised on €4M–€12M pre-money. Stack a pre-seed and a seed and founders are typically at 65–75% post-seed, before option pool.
Add a 10% post-seed option pool and founders land at 60–67% post-seed. This is the cap table that Series A investors will look at when you raise 12–18 months later — and they will want to see clean founder ownership above 55% to feel comfortable that founder incentives remain aligned through Series B.
If you are below 55% founder ownership at seed close, you have over-diluted. Common causes: raising too much at too low a valuation, overly large option pool at seed, multiple pre-seed instruments stacking with low caps that all convert favourably to investors.
Founder Vesting Starts Here
Almost every seed term sheet — and many pre-seed CLAs with a lead angel — requires founder vesting on the cap table. Standard structure: 4-year linear vesting with a 1-year cliff. Credit for time served (typically 12–24 months) is negotiable; full credit is rare unless the company has been operating for 3+ years and shipped meaningful traction.
The economic consequence is real. A solo founder owning 80% post-seed with a 4-year vest starting at seed close holds 0% vested on day one and reaches 25% vested at month 12 (the cliff). If they leave at month 11, they retain nothing of their 80% stake — the unvested shares either buy back at nominal value or convert to treasury. See the [vesting schedules guide](/captable/vesting-schedules) for cliff and acceleration mechanics.
Negotiating tactic: push for credit for time served from the date of incorporation, not the date of the seed close. A two-year-old company with two founders should have at least 50% credit vested at seed close — meaning the cliff applies only to the remaining 50%.
How Seed Terms Set Series A Precedents
Series A investors review the existing Shareholders Agreement and Articles in diligence. Any clause they consider sub-market in the existing documents must be amended in the Series A — but amendments require consent from the existing preferred shareholders. This gives seed investors a structural veto over Series A terms that improve founder economics.
Practical examples: a 2× liquidation preference at seed is almost impossible to remove at Series A. A multi-class voting structure that gave seed investors weighted votes carries through. An overly broad list of protective provisions becomes the Series A baseline.
The corollary: clean, market-standard seed terms make Series A negotiation dramatically easier. Founders who insist on 1× non-participating preference, broad-based weighted average anti-dilution, standard protective provisions and clean board composition at seed are rewarded with clean term sheets at Series A. Founders who accepted aggressive seed terms to win €100K of extra valuation often pay for it tenfold at Series A.
Use CAPLINK's [cap table management](/captable/cap-table-management) tools to maintain a clean ledger from incorporation onwards, and run the [pre-money vs. post-money guide](/captable/pre-money-post-money-valuation) to model every seed offer before signing.