Raising funds from family - how have you been handling it?

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November 17, 2020

by a searcher from Ecole Polytechnique in 92150 Suresnes, France

Have you seen a change in the relationship?
Do you advice or not?
Have you raised only for searching but not for acquiring? or the opposite?
Thanks

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Reply by a searcher
from IE Business School in Seattle, WA, USA
I raised only from family & friends, but I happen to have a F/F network with individuals who are familiar with the risks of these types of investments & who can "afford" to take such risks. I had lengthy conversations with each of them before agreeing to take them on as Investors to make sure we were on the same page. Take the time to overcommunicate the risks & how you intend to handle it with them if things go poorly. Similar to Nick, these Investors have been extremely supportive & are interested in the journey I'm on, not just the end goal. I didn't feel comfortable taking any investment to fund the search stage - I'm funding that myself - so each of my Investor will have the opportunity to evaluate the target I find before they invest. I'm currently oversubscribed a bit, so there won't be any hard feelings if someone backs out later.
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Reply by a searcher
from Curtin University of Technology in San Francisco, CA, USA
Contrary to all the startup advice given about raising money from FFF (i.e. Friends/Family/Fools), I avoid it at all costs unless you’re ok with family and friend gatherings turning into quarterly earnings reports. Also, if you happen to lose that capital for whatever reason then be prepared for your friends and/or family to never look at you in the same way again.

Moreover, it’s much better to raise capital from outside your exisiting warm network as it’ll force you to become much more succinct and strategic in your capital raising efforts.
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