
Ask HN: Friends and Family? With Money? - pauli-exclusion
Being a minority founder who grew up in a low-income neighborhood, asking &quot;friends and family&quot; for money was not an option. When everyone I knew is just barely getting by, asking them for money is fruitless.<p>It makes sense after looking at some founder stats. 77% white, many went to Ivy Leagues and come from higher-income families. 
(Source: https:&#x2F;&#x2F;news.crunchbase.com&#x2F;news&#x2F;untapped-opportunity-minority-founders-still-being-overlooked&#x2F;).<p>Is that the way of the world, or should there be more effort into supporting founders without &quot;friends or family&quot; that can kickstart their ventures? Does anyone have any literature on this topic they can point me to?
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m_ke
"Startups" of this type are for rich kids. Most people don't invest in ideas
and expect a working product with traction before they put any money in, so if
you don't have rich parents your best bet is to get a job and build an initial
prototype on the side.

If you build something good and people notice it you'll get angels reaching
out to you looking to invest.

Other options include building the product while you're in school, joining an
incubator or getting a job at a company like Google, where you can make
"friends" who might have disposable income that they could invest into your
idea.

Another thing that a lot of people miss is that not all ideas/businesses are
venture scale. Most VCs are looking for companies that have a shot at doing
>100mil in revenue per year, which eliminates 99% of potential business ideas.
Your goal should be to build a successful and sustainable business, not to
raise money from outside investors.

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digital_voodoo
"Talent is everywhere, opportunity is not" [1] I've had countless hours of
discussion with a few friends on this. Seems to sum up quite well how I see
it. [1] [https://ourworldindata.org/talent-is-everywhere-
opportunity-...](https://ourworldindata.org/talent-is-everywhere-opportunity-
is-not)

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probinso
If you live in the states, Look into SBA funding. Its slow funding, but if you
can find a fit there is a lot there. Also, because its slow, most founders
don't take it seriously (there is less competition)

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adventured
I came from a low income situation in Appalachia. Friends and family had zero
money for such things as well.

I have one central piece of advice: build something that matters, something
that is good, something that can get attention. It doesn't have to be giant in
scope. It's a leveling thing, if you make yourself hard to ignore by being
great at something. There are few literal barriers to doing it other than
doing it (there are infinite life & work friction points that will try to slow
you down). With the Internet you can pick a technical subject and become good
at it and then keep going, becoming great at it. If you're great at most
anything in tech, you can open a lot of doors.

I grew up in technical poverty (government healthcare and food stamps
included), although it didn't feel like it (I didn't know we were poor). The
Internet was a revelation for me, circa 1994. Lightning from Zeus himself. I
had only a passing interest in computers growing up. The Internet however, I
immediately got it, its enormous potential was obvious. Computers were tools,
the Internet was the platform to reach and access the world, a canvas to paint
anything on and immediately distribute it with few barriers. I'm still in love
with it.

I started a small wannabe gaming company in the late 1990s with people I met
online. I had zero network, just the willingness to put myself out there and
try. I gradually got to know a bunch of people by running a gaming blog
(basically that's what it was) and hanging out on a lot of IRC channels. These
things were points of contact into a field I had no connection into initially.
I didn't mind failing, I never thought much about it at that age.

I was infatuated with the world of the Web in the 1990s, it seemed incredible
like a brilliant light show. I got to know some Silicon Valley people just by
emailing them and learned a lot about how to pitch / sell (broadly speaking).
I learned that so much of it is just being willing to do it and have doors
slammed in your face repeatedly (most people won't do it out of fear of
rejection). In those days you could email almost anybody, from Michael Dell to
Tim Berners Lee, and get a reply. HN is now a great resource for that same
premise, there are thousands of prominent builders on HN that you can freely
email and they will reply, they will offer sage advice.

I messed with programming and Web development throughout the 1990s. I ran a
small consulting business at around 19-23 years old. That taught me the value
of not spending my life making money for everyone else by building their
platforms, and instead building my own. Consulting / freelancing also doesn't
scale effectively as primarily a billable hours service business. It's useful
as a personal funding resource to enable you to build on your own dime, and
can be particularly effective today (back then it was hyper local still; now
you can far more easily reach around the world and find business clients).

I went in search of a lever. With the modest experience at building things
that I had accumulated, I started working on systems that would scale, at
around 24 years old.

So the prior seven or eight years required zero venture capital and very
little funding. It required a shitty PC and a dial-up account. No Ivy League
necessary and I required no permission. I was free to learn and build to
whatever capacity I could. I was constantly turned down when asking friends &
family for money for ventures, nobody ever said yes. It was always
embarrassing even to ask (I realistically knew the answer ahead of time), my
own grandmother turned me down. It was a combination of them not having it and
the few that did (successful small business types) being very conservative
financially (investing in a tech related venture was far beyond their shores).

I raised my first formal venture capital with the first platform type service
I built in 2004-2005. It was a serious undertaking that took about 9-12 months
to build, in the ecommerce space. The VC raised was modest, like a YC seed
round. It was enough, mostly, though.

Having a product will often open a lot of shut doors. They don't have to bet
on you as an unknown, they don't have to bet that you can build this thing
that you claim you can. With a product in hand, you've already demonstrated
that and removed that risk factor for the investor. Then they have to evaluate
and decide if they like what you already have. The investor will now view it
as you possessing an actual asset, rather than an idea (most astute investors
know what those are really worth). I've found walking in the door with a
product, even a modest demo, makes an immense difference.

If you can build product on your own (again, even something modest), you can
raise money from all sorts of diverse sources these days. The last venture
capital I raised was from a billionaire courtesy of a cold email I sent,
backed with a modest demo of the product. Nothing enabled that other than my
accumulated experience at pitching (getting told NO a million times and
learning from it) and an ability to build something to show.

If you can't build you're fucked, basically. Unless you either have a network
/ reputation (Ivy League etc), friends & family with money, or you're special
in some way (a talented salesperson for example, that has a jobsian gift for
convincing people). Teach yourself to build things and do it over and over and
over and over again. You will fail a lot most likely; that is a required point
of suffering more often than not and is useful. Persist.

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greenyoda
Even if parents are wealthy, I don't think it's wise for them to throw large
sums of money at businesses started by their kids.

At least if you're a venture capitalist, you have a large portfolio of
businesses, and if 1% of them become unicorns, you might win. But a parent
acting as a VC for one child's business is almost certain to lose their entire
investment.

Other advantages that VCs have over parents, besides diversification:

\- VCs are playing mostly with other peoples' money.

\- They are more selective about who qualifies to receive funding, and better
equipped to evaluate whether a business plan has any promise.

\- They can offer guidance to founders on how to run their businesses.

As someone whose parents didn't have a lot of money, I don't think I missed
out on anything by not having parents who could fund a business that I
started. On the contrary, I think I benefited from having to work my way
through college and learning how to live independently off my own earnings.

