Journal

Grant or pre-seed? How to choose your first money

By the Thaw Ventures team · 2026

Early teams usually meet two kinds of first money: a grant that pays for a piece of work, and a pre-seed round that buys part of the company. The useful question is not which is better, but what you need to prove next, because each leaves you in a different position for the money that follows.

What each one costs

• Time. A grant costs an application and milestone reporting. A pre-seed costs a fundraising process that can take weeks of founder attention.
• Dilution. A grant takes no equity or tokens. A pre-seed takes a stake and sets a price that the next round is measured against.
• Obligations. A grant commits you to delivering a milestone. A pre-seed commits you to investor updates, consent rights and a path to growth.

When a grant is the better first step

• The idea is unproven, so any valuation would be a guess.
• The work is infrastructure or public-good work that matters before it has a clear business model.
• One working demo would make the next conversation with investors much better.
• The founders are not yet full-time, and a grant is a decision you can make today.

When a pre-seed makes more sense

• The team is ready to work full-time and the plan needs months of salaries, not one deliverable.
• The market is clear and the main risk is execution rather than whether the idea works.
• You need runway for hiring and sustained work, which a single milestone does not cover.
• Waiting for a grant decision would let someone else ship the same product first.

Grant first, then a round

Many teams fit both. The grant pays for the first milestone, the milestone becomes evidence, and any later round is priced on something that exists. Choose the milestone that removes the biggest doubt an investor would have, not the one that is easiest to build.

Red flags on both sides

• A “grant” that asks for equity, tokens or a warrant is an investment. Evaluate it as one.
• Hidden rights: a right of first refusal, exclusivity, or ownership of your code passing to the funder.
• Pre-seed money that flows back to the investor as service fees is not runway.
• Pressure to launch a token before the product works.