5 ms·

The lesson it seems to me is that that is not the correct way to go about raising a small, $150k round. Founders should be able to round that up from friends an

by pbreit 11y ago

The lesson it seems to me is that that is not the correct way to go about raising a small, $150k round. Founders should be able to round that up from friends and family.

andrewstuart 11y ago
"Friends and family round" has to be one of the worst concepts I've ever heard. Great way to destroy your most precious and important relationships.
- andrewchambers 11y ago
  I agree, money issues are one of those things that can destroy relationships. Never borrow money from friends, be extremely careful when borrowing money from parents.
- pbreit 11y ago
  If that's your attitude, probably not cut out for founding.
  - rktjmp 11y ago
    "Probably don't have enough wealthy friends & family" you mean? Actually re-reading your comment I'm still not sure what you mean? If you're not willing to sacrifice relationships to start a company, then you're not cut out for founding? Isn't that a pretty unhealthy position to take in life?
    - pbreit 11y ago
      Resourceful people should be able to find people relatively close to them that could kick in $5-50k x 3-10. You don't need to have a wealthy family or circle of friends. The potential to sacrifice relationships is the complete wrong way to look at it. Investing is not only opportunistic, it can help someone realize a dream. Correct, if these are your first thoughts, you are going to struggle mightily as a founder.
      - andrewstuart 11y ago
        Very naive.
        pbreit 11y ago
        It's really not naive. Starting a startup is hard. If you and 1-3 others are not resourceful enough to round up $150k from your networks, no matter what you're financial means, you are going to have a very difficult go of it. This is not the hard part.
afarrell 11y ago
> Founders should be able to round that up from friends and family. Not everyone's family or social circle is in that financial position.
- pbreit 11y ago
  Two or three resourceful founders, no matter their social circles or financial means, should be able to find $150k.
  - afarrell 11y ago
    Yes, but how is that a "friends and family" round if none of it is raised from friends and family? EDIT: If you assume your friends and family can each spare $500 (which given a median household income of $51,000/year or $3,500/month after federal taxes... Maybe half the U.S. Population in a given month can spare that after rent, food, childcare, auto, and debt repayments.) then you need to get 3000 "yes"s to get to 150k. At a 20% yes rate, that means you are asking 15,000 people for money. It makes far more sense to ask people in the upper decile, who make $145,000 per year of household income and who might have some investment income that they can throw at you. Alternately, to raise from people who regularly invest in early-stage businesses. If you don't have any such folks in your social circle, you are going to be busting your ass and trying to make cold intros.
    - pbreit 11y ago
      2-3 resourceful founders should be able to find 3-15 people to kick in $5-50k each. A friend could be a former boss, a customer, the owner of the local coffee shop, a mentor, a classmate, a teacher, whatever. Don't start quoting average incomes and such. This is not about average. If you really want to talk about average, the average coffee shop, pet store, hair salon, restaurant, raises $150k.
      - afarrell 11y ago
        All those businesses have well known models and physical assets that can act as collateral for a bank loan, possibly through the SBA. > This is not about average That is my entire point, that you are speaking from not from the perspective of a person whose connections are of average wealth. If you have a close enough relationship with that many people who have 10k (that is, 2 months pre-tax income for most people) they can just put into a highly risky venture, you are starting from a position of economic privilege: wealthy people trust you with their money. Is it possible to build a consulting practice and thereby build relationships with people who will then be confident in your ability to execute? Sure. Is it possible to go to a college with wealthy professors and inordinately impress them? Sure. It is possible in the United States to work yourself into a higher class. All I'm saying is that being able to collect $150k from your connections certain things from your social position.

by pbreit 11y ago

The lesson it seems to me is that that is not the correct way to go about raising a small, $150k round. Founders should be able to round that up from friends and family.

andrewstuart 11y ago

"Friends and family round" has to be one of the worst concepts I've ever heard. Great way to destroy your most precious and important relationships.

andrewchambers 11y ago
I agree, money issues are one of those things that can destroy relationships. Never borrow money from friends, be extremely careful when borrowing money from parents.
pbreit 11y ago
If that's your attitude, probably not cut out for founding.
- rktjmp 11y ago
  "Probably don't have enough wealthy friends & family" you mean? Actually re-reading your comment I'm still not sure what you mean? If you're not willing to sacrifice relationships to start a company, then you're not cut out for founding? Isn't that a pretty unhealthy position to take in life?
  - pbreit 11y ago
    Resourceful people should be able to find people relatively close to them that could kick in $5-50k x 3-10. You don't need to have a wealthy family or circle of friends. The potential to sacrifice relationships is the complete wrong way to look at it. Investing is not only opportunistic, it can help someone realize a dream. Correct, if these are your first thoughts, you are going to struggle mightily as a founder.
    - andrewstuart 11y ago
      Very naive.
      - pbreit 11y ago
        It's really not naive. Starting a startup is hard. If you and 1-3 others are not resourceful enough to round up $150k from your networks, no matter what you're financial means, you are going to have a very difficult go of it. This is not the hard part.

afarrell 11y ago

> Founders should be able to round that up from friends and family. Not everyone's family or social circle is in that financial position.

pbreit 11y ago
Two or three resourceful founders, no matter their social circles or financial means, should be able to find $150k.
- afarrell 11y ago
  Yes, but how is that a "friends and family" round if none of it is raised from friends and family? EDIT: If you assume your friends and family can each spare $500 (which given a median household income of $51,000/year or $3,500/month after federal taxes... Maybe half the U.S. Population in a given month can spare that after rent, food, childcare, auto, and debt repayments.) then you need to get 3000 "yes"s to get to 150k. At a 20% yes rate, that means you are asking 15,000 people for money. It makes far more sense to ask people in the upper decile, who make $145,000 per year of household income and who might have some investment income that they can throw at you. Alternately, to raise from people who regularly invest in early-stage businesses. If you don't have any such folks in your social circle, you are going to be busting your ass and trying to make cold intros.
  - pbreit 11y ago
    2-3 resourceful founders should be able to find 3-15 people to kick in $5-50k each. A friend could be a former boss, a customer, the owner of the local coffee shop, a mentor, a classmate, a teacher, whatever. Don't start quoting average incomes and such. This is not about average. If you really want to talk about average, the average coffee shop, pet store, hair salon, restaurant, raises $150k.
    - afarrell 11y ago
      All those businesses have well known models and physical assets that can act as collateral for a bank loan, possibly through the SBA. > This is not about average That is my entire point, that you are speaking from not from the perspective of a person whose connections are of average wealth. If you have a close enough relationship with that many people who have 10k (that is, 2 months pre-tax income for most people) they can just put into a highly risky venture, you are starting from a position of economic privilege: wealthy people trust you with their money. Is it possible to build a consulting practice and thereby build relationships with people who will then be confident in your ability to execute? Sure. Is it possible to go to a college with wealthy professors and inordinately impress them? Sure. It is possible in the United States to work yourself into a higher class. All I'm saying is that being able to collect $150k from your connections certain things from your social position.