Funding is one of the biggest hurdles that many startups face. When you’re just starting up, you’ll need some cash in your pocket to get the ball rolling. And the first people you might turn to for support are your friends and family.

  1. Understand the Types of Investing and Funding

  • Loans: A planned repayment or repayment with interest 
  • Gifts: You don’t have to pay back the money (*always put a formal agreement in place*)
  • Equity: Investors become a business partner and are intertwined with the company (*advised to check with a lawyer, and definitely sign a formal agreement*)

  1. Determine How Much You Need

It’s easy to shoot for the moon when you’re riding high and just getting started on building your new dream company—but one of the purposes behind a friends and family round is that it’s really meant to be just a kick-start.

  1. Let People See Your Own Investment And Commitment.

Friends and family are quick to differentiate between a passionate hobby and a sincere effort to change the world. Show them that you have done your homework. 

  1. Create A Pitch

When you first approach friends and family for equity capital, you will need to start as you would with any other investor: with a “pitch”.

In startup lingo, a “pitch” is when you lay out your business idea, what problem it’s solving and where you see it going in the future. This is how you convince them to put their money in the growth of your startup.