Are you at that point where you are wondering how to raise money from friends and family?
Aside from self-funding, friends and family are the main first step and source for financing a new startup company. It can be some of the best money you can raise.
They may be some of your favorite investors. There can also be some pitfalls with serious long term repercussions if you aren’t careful.
Here is the process of how to raise money from friends and family the most effective way, as well as why you should, and what’s next…
Why Raise Money From Friends & Family
There are several reasons that entrepreneurs should raise from this group, as well as multiple benefits of doing it.
This is one of the most attractive reasons why you may want to know how to raise money from friends and family. This is by far the easiest money to raise.
Despite all the hype in the media about raising big money, securing investors is still all about personal relationships and getting them to know you, like you, and trust you. You may not have these connections with VCs yet, but you do have them with your friends and family.
While later institutional investors don’t want complicated corporate structure and diluted equity arrangements, having already raised money from friends and family is a great sign. It shows that those who know you best trust you and believe in you enough to give you their money.
The Best Terms
You want them to get a good return on their investment, but you should still be able to negotiate far more attractive terms and rates with this group than any bank or VC firm.
Help Them Without The Handouts
As part of understanding how to raise money from friends and family you always need to come from a place of caring. You want to help your friends and family financially.
This is the perfect opportunity to do it. If they invest with you, they can share in your success and may gain far more than with their money stuck in a stuffy 401k, boring mutual fund or the overinflated stock market.
If they don’t then when you make it everyone may be showing up looking for a handout. This evens it up a bit.
Gaining Backers & Company For The Journey
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
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- Investor Access : connect with the right investors for your business and close them