Asking family members to invest in your start up?
Monna Lissa Raja
18 replies
What are your thoughts on asking or just opening up to family members/relatives to invest in your start up? Does this usually work?
Replies
Trace Cohen@trace_cohen
Overspot
Totally fine to ask them, most just want to support you / might not fully understand what they're actually investing in 1)Make it clear there is a very high chance they will lose 100% of their money 2) It will take 5-10yrs if you are successful to get any liquidity 3) DONT offer them uncapped notes/SAFE - love those that love you first!
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Money Minx
Launching soon!
Depends on the family member. If they usually invest in startups then I don't see the problem. If they are more of the mutual funds or index funds type then I would say no.
almost everyone in my family owns a business.
we understand the investment issues, so why not investing in the family!
At the end of the day, (1) you never know who knows who (2) it's good practice to pitch to your family.
Maybe your uncle whose a doctor knows other doctors or c-level executives. Maybe your aunt has a friend from high school whose a CEO at an organization where your product would fit perfectly. You just never know who knows who so be humble and ask for help. I'd also suggest you really dig deep and make sure you would be ok with losing your families money and if they would be ok with it.
Lastly, I'd suggest not making the first pitch to a family member about money. Just go in asking to pitch them for practice and show your passion for the product/industry, tell them a story. Then a few weeks/month(s) after, hopefully you'll have some traction, and that's when you can ask for money to keep you going. This way they've seen your passion in a casual setting and then they've seen progress.
Seeking investments from friends and family can be an ideal way to raise seed money to get your company off the ground. This is also labeled as "pre-seed round"
sheet2doc
Never mix family with business
TemplateShake
Yes, sure!
I think it's normal
Also I am doing business with my wife 😊
Ask? No No.. If they offer to invest, I'll consider
I was always told that when it comes to friends and family "never a lender or borrower be."
Only if your family members don't invest just because you are a part of their family.
I think it depends very much on the family you stem from. In my root-family there was no entrepreneurial gene at all, I was watched like an alien, suspicious of trying to avoid real work. But when the parents or relatives are founders themselves already, then I think it's a totally different thing, then they understand themselves perhaps as early investors and want to encourage and support you, knowing the risks and providing precious advice.
@timz_flowers I can relate to this very well. We mentioned our startup to both of my in-laws individually, my father-in-law had a really good response and offered to invest a small amount of money on a monthly basis even without being asked for it. On the other hand, my mother-in-law (and any relatives on that side) just probably thought it's just one of those crazy ideas we had. Father-in-law had been a businessman practically all his life.
@timz_flowers I got a good laugh out of this "I was watched like an alien, suspicious of trying to avoid real work" It's so true.
Yeah.. I wouldn't...
It's a much better idea to find the money from anywhere else!
The Startup in Question better not be an MLM . If its an Multi Level Marketing scheme dont be surprised if you get kicked out of the family.
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