Friends and Family Funding

Fund Your Startup with Friends and Family Money

Posted by on May 6, 2014 in Angel Funding, Blog, Friends and Family Funding

We are super excited to announce that our next title,  Startup Crash Course: Friends and Family Funding, is now available on the Amazon Kindle store (here), and will soon be out for iBooks, Google Play, NookPress, and as a PDF. As you may know, many startup founders rely on friends and family funding to get their ventures off the ground. This Startup Crash Course details all of the common friends and family funding structures, including simple loans, profit sharing agreements, equity deals, and convertible notes. Getting the money in the bank is a big step, but doing it the right way matters even more. This book provides easy to follow guidance for choosing and documenting the best funding structures for both your startup and your funding partners. As an added bonus, a promissory loan walkthrough provides blow by blow details of each clause. Check it out, and as always, let us know your comments, feedback, and...

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“I know I should, but…”

Posted by on Feb 25, 2014 in Blog, Friends and Family Funding, Uncategorized

More often than not, this is the answer I get when I ask an entrepreneur if he or she has documented a recent friends and family fundraising deal. Certainly some forms of startup funding require a good deal of paperwork and spending money on legal help—selling an equity stake, for example. Because it’s quick and easy to document simple loans and some other funding options, founders should fight the urge to procrastinate on this task. Easy and quick. You can execute a business loan using a one or two page promissory note, after negotiating a few basic terms. Once you and your friends and family (F&F) supporter agree about the general deal points, finalizing the loan with a promissory note logs the details of the loan, including items such as: Details about the lender and borrower The loan amount The interest rate The repayment structure The term of the loan Additional clauses of a promissory note help define: What happens if the borrower misses a payment How to handle early payoff of the loan How to modify the loan agreement if the parties agree Do it yourself? Many founders opt to complete the loan paperwork without the assistance of a lawyer or CPA. There are many promissory note examples...

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The First Rule of Friends and Family Funding

Posted by on Feb 12, 2014 in Blog, Featured, Friends and Family Funding

Recently I let my group of close friends know that I had published my first eBook for entrepreneurs—Startup Crash Course: Angel Funding—and mentioned the next planned book about friends and family funding. One friend immediately sent me a message saying: “I wish your next book was done. I’m about to pull the trigger on investing in a friend’s startup and would love some advice.” We’re now working together to identify the best structure for everyone involved in the deal. Sorting through the various funding options for founders and investors alike can be especially tricky, because you’re putting both your dollars and your relationship on the line. Aside from personal savings or income from the founders, friends and family (shortened to just F&F for this post) funding is one of the most common sources of early capital for a startup company. F&F folks often invest to place a vote of confidence in the entrepreneur, wanting to help in getting the entrepreneur’s new venture off the ground. Many startups need a relatively small amount of money to reach early, yet critical, milestones. The early investment need may range from a few thousand dollars to $20,000, or somewhat more. Scraping together these amounts from “well positioned” F&F is often the best and...

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