How founders can use the ‘rule of 3’ to prepare your pitch and quickly raise vital funding to launch your startup

  • Good things come in threes, and that holds true when raising pre-seed funds for your startup.
  • Data from DocSend, including a study last year of 174 startups, shows a hidden rule of three that can guide founders as they prepare their pitches.
  • This approach could help prioritize your attention and effort during what DocSend CEO Russ Heddleston said is “the most painful round of funding for a company.”
  • Visit Business Insider’s homepage for more stories.

Three is a magic number.

Reading through data on pre-seed startups’ fundraising efforts, the number consistently jumps out as a marker of what separates success from failure.

As institutional venture capital trickles down into pre-seed funding rounds, the importance of landing these early-stage deals grows.

The data come from DocSend, a cloud-based document sharing startup that has its finger on the digital pulse of what’s happening among startups and investors.

“Pre-seed isn’t the new seed,” DocSend CEO Russ Heddleston told Business Insider last year. “It’s a formalization of the angel round.”

As actual seed deals become more formal – and later in a startup’s life – pre-seed deals are starting to fill a funding gap that typically tops out around $500,000.

The bets are smaller for investors, but that cash is critical for startups that need to prove their concept with more metrics before embarking on the official fundraising journey.

“It’s the most painful round of funding for a company,” Heddleston said. “Every round of funding is easier than your pre-seed.”

Here’s how thinking in threes can help make the process less painful.

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