It’s really easy to find information about raising money from angel investors or VCs, but many people don’t think about another important way to fund your startup: raising money from family and friends. I’ve raised money from friends and family twice and want to share what I’ve learned so that you can raise money from your friends and family and still be able to attend your family reunions. Raising money from friends and family can be easier and less complicated than raising money from professional investors, but is not without drawbacks.
There are certainly pros and cons to raising money from family and friends and when it came time to raise money with my first company, I had the choice to raise money via angel investors or from family and friends. We were able to raise six figures fairly quickly from a good group of investors, which helped us stay focused on running our business rather than raising money. Unlike working with an angle or VC groups that would have wanted to get to know us for at least three months, we were able to close our round in about six weeks.