I believe that like others have said - it depends. If a friend or family member is fully aware that there is a risk of loosing their money, but they do not mind. I will be glad to take their money.

Of course, happens all the time in the VC world but tread carefully as many have commented. Ultimately, they believe in you so if the business falters, were they clearly aware of the risks and are they satisfied the failure was unavoidable/not of your doing? It helps to keep them informed along the way but you definitely want to keep an arms length distance to them...last thing you need is a backseat driver in the front seat of your business.