Funding from Family and Friends

1min read Should you raise funding from family and friends?

Funding is a massive hurdle for any new business. In the beginning, it may be difficult to convince a traditional investor to see your vision and join your initial funding round.

For this reason, many startups raise funding from family and friends to get the business up and running during their first round.

There are pros and cons to funding your business with money from the people you know.

You’ll need to approach the right people and keep it professional.

The problem is, that many startups are reluctant to take family and friends’ funding because they fear the awkwardness of what happens if things don’t work out.

The glaring question is always: Should I take money from family and friends to fund the business?

The answer is: Yes.

Outside investors will look at family and friends’ funding as a sign of support for your business. This is a good thing. It is a major plus to have this support when you’re seeking additional funding later on.

Consider it from the investor’s perspective: If your family and friends won’t invest, why should the outside investor invest?

So, don’t be afraid to approach your family and friends for funding. In the long run, it can help you with additional funding in the future.

 

Read more on the TEN Capital eGuide: Family, Friends, and Other Funding Sources


Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: hallmartin@tencapital.group

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