Pre-Seed Funding Reality: $250M Rounds and Viral Billboards Not Investor Priorities

A recent social media post by James Hawkins, identified as a "hedge honcho / co-ceo at posthog," has sparked discussion by humorously listing "pre-seed startup red flags" that include a lack of a Chief AI Officer, zero viral billboards, and not having raised $250 million from late-stage VCs. The tweet, which asked "what'd i miss," highlights a satirical take on common, often exaggerated, startup metrics.

In reality, pre-seed funding rounds typically involve significantly smaller amounts, generally ranging from tens of thousands to a few million dollars. Data indicates that the average pre-seed funding often falls around $50,000 to $500,000, with some reaching up to $5 million. A $250 million raise is characteristic of much later-stage investment rounds, not the nascent pre-seed phase where companies are still validating ideas and building initial prototypes.

While the role of a Chief AI Officer (CAIO) is gaining traction, it is primarily seen in more mature companies (Series A and beyond) or those with substantial AI integration, often commanding high salaries. For pre-seed startups, the focus remains on core product development and market validation, with AI expertise typically integrated within the founding team or through advisors. Similarly, "viral billboards" are not a realistic or strategic marketing tool for a pre-seed company, which prioritizes proving product-market fit over large-scale brand awareness.

The importance of a ".ai" domain, another point in Hawkins' tweet, holds some truth for AI-focused ventures. These domains have become valuable branding assets, signaling industry relevance and offering better name availability. Google now treats ".ai" domains as generic top-level domains for SEO purposes, making them a legitimate choice for AI startups. However, this is a branding choice, not a fundamental "red flag."

Genuine pre-seed investors focus on foundational elements such as a strong founding team, a clear vision, coachability, and a realistic assessment of the market. Key red flags for investors often include a "broken cap table" (poor equity distribution), founder disagreements, an inability to articulate the problem and solution, dishonesty, and unrealistic market sizing. These practical concerns, rather than satirical metrics, form the basis of early-stage investment decisions.