0816_TOEFL-Test-and-Score-Manual-1997

Money Matters ● 47
How to Raise Money from
Your Family or Friends
While it’s usually better to raise money from professionals, most
business owners start with money invested by friends and
relatives. But taking money from people you know can be sticky. So
here are some tips:
1. Make sure the person understands your business concept and all
the risks involved in investing— put it all in writing.
2. Treat a family member or friend like all the other investors.
3. Provide frequent updates explaining what’s going on with the
business. Be honest.
4. Don’t discuss business matters at family gatherings or social events.
5. Never offer an investment opportunity to anyone who can’t afford
to lose it all.
Sherman, who prefers to sit on the board of the companies he invests in,
said angel money is usually based on a personal relationship. The investor
also has to feel some affinity for the product or service. “Sometimes you can
position a product as something that will change lives, and then investors
view it as almost donating to a charity.”
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