What Startup Mentors Say About Raising Money From Friends And Family

So you’re setting out to capitalize (both literally and figuratively) your new venture. Should you seek to raise money from friends and family?

A recent survey from Pepperdine University’s Graziadio School of Business shows that about 13% of small businesses sought capital from friends and family this year.

Here are three points from startup mentors to keep in mind when raising money from friends and family:

  1. ‘No’ is not a rejection – just because you think your idea is great, it may not resonate with everyone.
  2. Use your own cash as long as possible – get to the point where you can clearly articulate you offering, and if possible, achieve concept validation.
  3. A positive signal to other investors – having a “money vote” is good, but when its from family it sends a signal that you’re all in.
  4. Real financial risk – if things don’t work out, family gatherings can be a little stressful.

Read more in the WSJ

Image courtesy of Flickr and Evil Erin