top of page

5 tips when raising Money from Family & Friends


Many entrepreneurs get their first round from friends and family because of the established trust; however, it is still important to keep a professional process to ensure that you do not limit investor interest in subsequent rounds. Don't: 1. Give Pro-rata rights to first investors. While you may want to reward your inner circle for trusting in you, and they may want the protection from dilution, it is important to keep in mind that these terms can be very unattractive to future investors. 2. Give Decision-Making Powers. Unless the person has relevant business or industry knowledge, it can be terribly time consuming to get signatures for approvals to make business decisions. Let investors know you will assemble an advisory board to help guide important decisions. 3. Restrict your Share Restrictions. I have seen this more lately with angel investors which will restrict the founders from selling their shares. Even though it may seem unlikely that you would sell shares this early, the unrestricted shares are still a bargaining chip in negotiations with future investors. Do: 4. Create a professional Business Plan and or Pitch Deck. You want your inner circle to invest because they like the idea and planned implementation which should shows a clear path to them getting a return on their investment. A professional business plan is important when raising money regardless of stage. 5. Have documents reviewed. It is always a good idea to have your offer documents reviewed by an attorney to ensure you and future investors are protected. Feel free to contact us with any questions at info@havebigplans.com


Comments


Featured Posts
Check back soon
Once posts are published, you’ll see them here.
Recent Posts
Archive
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

BIGplans    

                                                Kavita Sahai has been working with entrepreneurs                                    info@havebigplans.com               

                                                to increase their profits and capital since 2002.                                          280 C Natura Avenue

                                                She has helped numerous businesses achieve their                                   Deerfield Beach, FL 33441

                                                BIG plans through capital raises, operational realignment,

                                                culture transformations and innovations in business

                                                models and products. 

 

 

  • LinkedIn Social Icon
  • Facebook Social Icon
  • Instagram Social Icon
bottom of page