This is definitely not common practice. It's not even uncommon practice. Most small-scale investors ($20k is small scale) usually can't afford to invest in sta

This is definitely not common practice. It's not even uncommon practice. Most small-scale investors ($20k is small scale) usually can't afford to invest in start-ups that they are active founders in themselves and are usually bitter when the company fails because they don't see the failure as their fault (they didn't do anything after all). Having said that, if they want to invest more in you, feel free to take their money... after all, they know what they're getting in to. However, don't let personal guilt drive your decision to offer them more stock than is reasonable or make you feel obligated to give them something for nothing. Start ups fail all the time and, by the sounds of this second go around, it may have been no-ones fault that the first one failed - some ideas just don't work in practice.