Pre-Seed valuations surge amid AI-fueled solo-founder boom
Base44 acquisition highlights shifting investor appetite for lone-entrepreneur ventures.
The annual report from the venture capital fund Fusion shows that even at the earliest stages of fundraising, pre-Seed rounds, which mark the initial phase of establishing a company, there was a significant increase in Israeli company valuations. In 2025, valuations of companies, particularly the most sought-after ones, rose by an average of 17% compared to the previous year, reaching approximately $13.5 million.
At the same time, the proportion of angel investors willing to invest in startups at valuations of $15 million or higher increased from 27% in 2024 to 34% in 2025. A more pronounced change occurred on the side of venture capital funds: the number of funds investing in pre-Seed rounds at these higher valuations grew sixfold, from 3% in 2024 to 18% in 2025.
Before the AI era, early-stage companies typically raised funds through presentations or direct conversations with investors. Today, this landscape has shifted dramatically. The report highlights the influence of AI tools on software product development and notes the rise of the “solo founder” trend, which gained momentum in 2025, particularly in angel-led transactions. Events such as the Vibe Coding trend and the $80 million acquisition of Base44 fueled discussion around the lone-entrepreneur model. According to the report, 48% of angel investors made at least one investment in such ventures, while roughly 20% made two or more. In contrast, venture capital funds continue to favor team-led companies: over 75% of funds reported making no investments in lone-entrepreneur ventures, and only 15% reported making a single such investment in 2025.
AI has also raised the bar for pre-Seed fundraising. In 2025, 68% of funds and 91% of angels expected to see a working product, while more than 60% of angels also expected initial sales. This continues a trend from 2024, when investors increasingly refrained from funding non-serial teams attempting to "raise on a pitch" without a product. Another emerging trend is the expectation for entrepreneurs to move faster with AI: the share of funds expecting pre-Seed startups to reach a Seed round within 6-12 months more than doubled to 51% in 2025, up from 22% in 2024. Among angel investors, 46% held the same expectation.
The report also shows a sharp increase in pre-Seed investment activity. In 2025, the number of funds making more than eight pre-Seed investments doubled compared to 2024, while the number of angels making more than five investments quadrupled compared to 2023. Private investors also displayed greater appetite for early-stage deals with larger checks: 42% of all angel deals in 2025 were in the $100,000-$250,000 range, up from 27% in 2024.
Compared to the U.S. market, early-stage Israeli startups are trading at a substantial discount. In the U.S. SAFE deal market, startups raising $1-1.5 million rounds are typically valued at around $10 million post-money. In Israel, the median valuation is $6.8 million, with top-quartile deals reaching about $10 million, representing a 30-40% discount relative to U.S. startups.
These findings come from Israel’s annual pre-seed report, published for the third consecutive year by venture capital fund and accelerator Fusion. The report analyzes early-stage investment activity in rounds of up to $2 million and includes data from 33 private angel investors, who reported 151 pre-seed deals, and 37 seed funds, which reported 181 deals. This is complemented by proprietary Fusion data covering approximately 1,200 startups.
