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I would do a small friends & family round pre-revenue. E.g., 8 friends and family @ 12.5K each = 100K. I don't mind if my success makes my friends & family so

I would do a small friends & family round pre-revenue. E.g., 8 friends and family @ 12.5K each = 100K. I don't mind if my success makes my friends & family some money. But I'll sure feel bad if I take their money and lose everything. Perhaps that would be motivating... (Note: where I live (BC, Canada), the provincial government offers a refundable 30% tax credit for investments like this, so if I did lose everything, friends & family would only be out 70K).

jboggan 9y ago
I wish I could do something like that but my friends and family are not accredited investors, even if they have $10k to give. From my understanding of securities law and compliance it really isn't possible.
- gricardo99 9y ago
  In the U.S., depending on the state, there may be an exemption for friends & family: https://www.strictlybusinesslawblog.com/2011/08/15/can-a-friends-and-family-round-include-non-accredited-investors-should-it/ https://www.strictlybusinesslawblog.com/2011/08/15/can-a-fri...
  - gsylvie 9y ago
    Exactly! Here's the BC, Canada website on exactly this (British Columbia Securities Commission): https://www.bcsc.bc.ca/For_Companies/Private_Placements/Private_and_early_stage_businesses/#FamilyFriends https://www.bcsc.bc.ca/For_Companies/Private_Placements/Priv...
- deleted 9y ago
  [deleted]
- ttul 9y ago
  In the US and most Canadian jurisdictions, friends-and-family can obtain an exemption from the accredited investor requirement. Same with employees.
watty 9y ago
This seems like terrible advice. I'm highly against borrowing money or receiving investment money from friends / family. The risk simply isn't worth the reward.
- ttul 9y ago
  Unless you're independently wealthy, F&F is often the only money you can get when you have no track record.
- paulddraper 9y ago
  I had a friend borrow money from his family for a business that didn't work out. It's a very uncomfortable situation.
  - gsylvie 9y ago
    I think it's better to structure it as an equity investment, and to really make it clear to friends & family that they are buying a lottery ticket that will probably lose. Also, make sure the investors are people where you wouldn't be uncomfortable if they saw your company's annual shareholder reports every year for the next 20 years - both in the failure and mad success scenarios. An ex-spouse or potential ex-spouse perhaps not a good choice.
cortesoft 9y ago
Most people in this world don't have any friends and family that have $12.5k to their name, let alone ready to invest in an unproven start up.
devdad 9y ago
This is really out of touch with the majority of friends and family where I come from. Sound advice if you're from privilege I guess. (Not meant to be rude)
- gsylvie 9y ago
  I'm a 30+ year old software-engineer in Vancouver, BC. And there's a housing bubble. My friends are mostly also senior developers / software architects / managers etc. Just get older. Then your friends will be richer.
jcadam 9y ago
Most of my family is poor and wouldn't be able to scrape together $1000 on the spot if their lives depended on it. I'm the exception here.

jboggan 9y ago

I wish I could do something like that but my friends and family are not accredited investors, even if they have $10k to give. From my understanding of securities law and compliance it really isn't possible.

gricardo99 9y ago
In the U.S., depending on the state, there may be an exemption for friends & family: https://www.strictlybusinesslawblog.com/2011/08/15/can-a-friends-and-family-round-include-non-accredited-investors-should-it/ https://www.strictlybusinesslawblog.com/2011/08/15/can-a-fri...
- gsylvie 9y ago
  Exactly! Here's the BC, Canada website on exactly this (British Columbia Securities Commission): https://www.bcsc.bc.ca/For_Companies/Private_Placements/Private_and_early_stage_businesses/#FamilyFriends https://www.bcsc.bc.ca/For_Companies/Private_Placements/Priv...
deleted 9y ago
[deleted]
ttul 9y ago
In the US and most Canadian jurisdictions, friends-and-family can obtain an exemption from the accredited investor requirement. Same with employees.

watty 9y ago

This seems like terrible advice. I'm highly against borrowing money or receiving investment money from friends / family. The risk simply isn't worth the reward.

ttul 9y ago
Unless you're independently wealthy, F&F is often the only money you can get when you have no track record.
paulddraper 9y ago
I had a friend borrow money from his family for a business that didn't work out. It's a very uncomfortable situation.
- gsylvie 9y ago
  I think it's better to structure it as an equity investment, and to really make it clear to friends & family that they are buying a lottery ticket that will probably lose. Also, make sure the investors are people where you wouldn't be uncomfortable if they saw your company's annual shareholder reports every year for the next 20 years - both in the failure and mad success scenarios. An ex-spouse or potential ex-spouse perhaps not a good choice.

cortesoft 9y ago

Most people in this world don't have any friends and family that have $12.5k to their name, let alone ready to invest in an unproven start up.

devdad 9y ago

This is really out of touch with the majority of friends and family where I come from. Sound advice if you're from privilege I guess. (Not meant to be rude)

gsylvie 9y ago
I'm a 30+ year old software-engineer in Vancouver, BC. And there's a housing bubble. My friends are mostly also senior developers / software architects / managers etc. Just get older. Then your friends will be richer.

jcadam 9y ago

Most of my family is poor and wouldn't be able to scrape together $1000 on the spot if their lives depended on it. I'm the exception here.