Pre-seed fundraising: what founders really need to prepare in 2026

Pre-seed is often described as a first cheque. In practice, it is the phase where founders lay the foundations of their cap table for the next decade. The decisions made here — choice of instrument, valuation, shareholders' agreement, legal structure — carry tax and financial consequences that become apparent, sometimes painfully, at the seed round or at exit.

In the creation and early-stage files we handle at the firm, the most frequent blockers in a pre-seed raise do not come from the pitch or the market. They come from poorly prepared documentation, the wrong instrument, or a cap table that is already unbalanced before a single external investor has entered.

In brief: pre-seed financing is the first formal fundraising round, sitting between founder bootstrapping and an institutional seed. In France, deal sizes typically fall between €100,000 and €500,000 — indicative ranges that vary significantly by sector, team and geography. The objective is not simply to close a cheque. It is to structure the round in a way that preserves the company's trajectory and the founders' room to manoeuvre through subsequent raises.

Pre-seed sits between self-funding and an institutional seed round. The distinction is not purely about size — it reflects the level of proof investors require before committing.

In 2026, seed funds demand stronger traction signals than three years ago. This shift makes the pre-seed stage more strategically critical: it is where founders must demonstrate that they can execute, not merely iterate.

The BSA AIR — Bon de Souscription d'Actions, Accord d'Investissement Rapide, or Share Subscription Warrant under a Rapid Investment Agreement — has become the standard instrument for French pre-seed rounds. Its mechanics deserve a clear explanation, because the instrument is frequently misunderstood.

Unlike a straight share capital increase, the BSA AIR is not debt. The investor provides funds which give them the right to subscribe for shares at a future financing round (or at a contractual maturity date), on pre-agreed terms. The key benefit: no valuation is fixed at the time of issuance. Instead, the parties agree on one or two protective parameters:

• The valuation cap: if the company is valued above this threshold at the next round, the BSA AIR holder converts at the cap, not at the market valuation — creating an effective discount.
• The discount rate: a percentage reduction applied to the next round's valuation (for example, 20%).

The BSA AIR is exclusively available to companies structured as société par actions (SAS or SA). It cannot be used by a SARL or EURL. If your structure is not yet a société par actions, conversion is a prerequisite to plan in advance.

What the BSA AIR does not resolve#

The instrument defers the valuation negotiation, but not the other costs. Drafting a BSA AIR requires a specialised lawyer and an accountant familiar with startups for the accounting treatment (recording the funds received, treatment at conversion). On the tax side, the gain for an individual investor is taxable only upon disposal of the shares obtained at conversion. For a French resident investor, the flat tax (PFU) of 31.4% (12.8% income tax + 18.6% social contributions, applicable since 1 January 2026) generally applies to the capital gain on disposal. This point requires personalised analysis depending on the investor's profile and holding period.

This is the most delicate question, precisely because it is often unanswerable with any objectivity at this stage. A few practical reference points.

Methods used in practice#

Without revenue or EBITDA, pre-seed investors cannot apply standard valuation multiples or DCF models. They reason on more qualitative factors:

• Team quality and complementarity: frequently the primary criterion, sometimes the only one.
• Total addressable market (TAM): a narrow market caps the valuation ceiling.
• Early traction signals: signed letters of intent, paid pilots, waitlists, number of documented customer interviews.
• Market comparables: valuations observed on similar deals by sector, stage and geography.

For a deeper treatment of valuation methods applicable at later stages, our article on startup valuation 2026 covers DCF, multiples and the Berkus approach.

The high-valuation trap#

An inflated pre-money valuation — chosen to minimise dilution — can work against founders. If the next round prices flat or below (a flat round or down round), it sends a negative market signal and may trigger anti-dilution clauses that significantly disadvantage founders. Our article on anti-dilution mechanisms explains why these clauses are a lever that institutional investors exercise regularly.

A dilution of 5% to 15% is generally considered reasonable. Beyond 15%, founders arrive at the seed round already too diluted to maintain effective control and sufficient attractiveness through subsequent rounds.

A worked example: dilution impact on the cap table#

Consider a SAS incorporated by two founders, each holding 10,000 shares (20,000 shares total). A business angel enters at pre-seed with €200,000 on a pre-money valuation of €1,600,000.

• Post-money valuation: €1,600,000 + €200,000 = €1,800,000
• Dilution = €200,000 / €1,800,000 = 11.1%
• New shares to issue: 20,000 × (11.1% / 88.9%) ≈ 2,497 shares
• Post-round cap table: Founder A 49.4%, Founder B 49.4%, Angel 11.1% (rounded to 100%).

If the seed round then dilutes by a further 20%, founders end up at roughly 39% each — still jointly majority, but with limited headroom for a BSPCE pool or future hires.

Had the same pre-seed been done at a pre-money of €800,000 for the same amount, dilution rises to 20% and founders arrive at seed at 40% each before any option pool. The cap table structure and term sheet is one of the most consequential decisions in the entire raise.

The BSA AIR has become the default for rapid pre-seed rounds with business angels. For rounds involving multiple investors and a formalised closing, a direct share capital increase with a term sheet remains more readable and avoids conversion complexity later.

Our dedicated article on the BSA AIR: advantages, risks and tax treatment covers conversion mechanics and the key clauses to negotiate.

Two schemes deserve close attention during the structuring phase.

JEI status (Jeune Entreprise Innovante — Young Innovative Company)#

JEI status (Article 44 sexies-0 A of the French Tax Code) can provide significant relief: IS exemptions in the early years and employer social contribution exemptions on salaries paid to researchers and developers. This status can materially reduce cash burn and extend the runway without requiring additional capital. Eligibility conditions — less than 8 years old, R&D expenditure ≥ 15% of tax-deductible charges, SME status under EU criteria — require precise verification. Our article on CIR 2026 covers the interaction between JEI, CIR (research tax credit) and CII (innovation tax credit).

BSPCE for the team#

BSPCE (Bons de Souscription de Parts de Créateur d'Entreprise, Article 163 bis G of the French Tax Code) allow key employees to participate in value creation without immediate dilution. Reserved for companies under 15 years old structured as société par actions, they are particularly suited to attracting senior profiles at pre-seed without paying full market salaries. The LF 2025/2026 reform modified their taxation: personalised advice is essential before any issuance. The article on BSPCE 2026 covers current conditions and tax treatment.

• Customer validation: document at least twenty customer interviews, with a synthesis of pain points, willingness to pay, and current alternatives.
• Company formation: SAS or SA with appropriate approval (agrément) and pre-emption clauses in the articles. Legal structure must be in place before investor conversations.
• IP assignment: all intellectual property formally assigned to the company, including code developed by founders before incorporation. This is the most common blocking point in tech due diligence.
• Founders' agreement: vesting schedule, departure clauses, drag-along provisions. Our article on the founders' pact covers the fifteen clauses that matter most.
• 12-18 month cash model: monthly burn rate, runway with funds raised, and specific milestones that will be reached before the next raise. No five-year revenue projections.
• Data room: Kbis, articles of association, share register, key contracts, IP documentation, any existing commitments. Our data room checklist gives the full 90-day preparation timeline.
• Pitch deck: 10 to 15 slides maximum. Problem, solution, market, traction, team, financials, ask.

On a B2B SaaS file we handle, a founder had secured two business angels ready to invest €150,000 via BSA AIR. Everything appeared aligned — until due diligence revealed that part of the product's source code had been developed during his previous employment contract, with no formal rights assignment to the startup.

The closing was suspended for three months while the situation was resolved with the former employer, reviewed by a lawyer, and formally documented as an IP assignment to the SAS. Both original angels stayed in. A third withdrew. The delay and the partial loss were entirely avoidable with proper pre-deal structuring.

The lesson: intellectual property is the first point examined in a tech file. It is also the most frequently neglected.

The accountant's angle on a pre-seed raise is not neutral. Here is what we observe in practice.

The first underestimated risk is the accounting treatment of BSA AIR proceeds. These funds are not recorded as equity (until conversion takes place), but in a liability or a specific suspense account, depending on the treatment adopted. This balance sheet position can have consequences if the company needs to justify its equity base for JEI qualification, a bank loan application, or if a statutory auditor is involved.

The second point is holding company timing. Many founders set up a personal holding company before or during the pre-seed phase to optimise future capital gains tax. This is often sensible, but the structure and timing must be decided before investors enter — not after. Our article on the apport-cession mechanism and Article 150-0 B ter explains the conditions for the capital gains deferral regime.

Finally, governance rules. Even at this early stage, defining board meeting frequency, quorum requirements and voting thresholds in the shareholders' agreement prevents paralysis later. Our article on startup board practices covers the rhythms and KPI reporting routines that investors expect.

Updated 2026-06-14. This article is for information purposes and does not replace personalised advice. For your specific situation, consult a qualified expert-comptable registered with the Ordre des Experts-Comptables.