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Ask HN: Is it a good idea to raise money from family and friends?
6 points by andrewstuart 7 months ago | hide | past | web | favorite | 4 comments

Yes. Just be honest. Be clear about the risks they are taking. Don't bullshit them with projections, etc. Don't take cash from anyone who is going to get hurt if you lose it. It's old fashioned advice these days but it works.

I just want to reinforce - whom ever your taking money from, should be willing to write off everything they give you. In fact they should do it the moment the money touches your hand.

That isn't to say that your going to fail but you dont want YOUR venture to get caught up in their personal circumstances if they change. People with enough money tend NOT to care about your payout (today, tomorrow or ten years on, if ever).

Depends on who your family and friends are.

I had a tenant in my other house (next door; we tend to be close to these people) who was trying to start a new business and was having trouble getting a bank loan for more than half of the capital he needed, I told him that he could consider raising equity instead and I told him I might be interested.

The next day he came around and asked if I was serious. I told him that I couldn't be the only investor but if he got other people in on it I would do it.

I put about $2000 in (three months rent) and kept getting rent for another few years. The business ran for about a decade before it went under. I didn't get my money back but I did get discounted merchandise and the pleasure of being involved.

I have no problem with how things turned out because I could afford to lose the money. Had it been $200,000 I might have been seriously pissed...

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