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Friends and Family Funding and Why I'm Dreading Thanksgiving

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Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#2

Post by rayiner »

Relevant: http://thinkprogress.org/election/2012/04/27/473096/romney-b....

Although it is a weird dichotomy if you think about it. People let parents pay for their college to the tune of $100k+ and don't feel any obligation to justify or defend the investment.

Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#4

Post by segmondy »

Well, next time, don't raise money from Friends and Family. Raise it yourself. Work for a few years, gain experience, live frugally and save. Then bootstrap with your own money, starting with your own money will really have you think harder than with other people's money.

Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#5

Post by fiatmoney »

rayiner wrote: post #2

Relevant: http://thinkprogress.org/election/2012/04/27/473096/romney-b... . Although it is a weird dichotomy if you think about it. People let parents pay for their college to the tune of $100k+ and don't feel any obligation to justify or defend the investment.

"College" is in this case a proxy for "entrance to the socially-defined middle class". Parents in general (or at least the middle-class ones that would have money to lend/give for college) want their children to be at least as high in the social hierarchy as they are.

Financing someone's business is much more of a mercenary decision; "do you run your own business" isn't really a social class marker in the way "did you go to college" is. It's strictly for the money (or for some, a kind of consumption in the form of a "hobby business" that doesn't actually make money).

Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#7

Post by 7Figures2Commas »

> I’m deep into my second pivot, and haven’t yet delivered an exit two years after that initial money.

Haven't delivered an exit after two years?!? What's wrong with you?!?

Sarcasm aside, while taking money from friends and family may not always be desirable for a variety of good reasons, the problems that arise from it are usually the result of unrealistic expectations.

Most companies never achieve an "exit", the average time to a liquidity event for companies that do is well more than a couple of years and most liquidity events don't produce Hamptons money for everyone involved.

If you have raised capital from friends and family and are sweating bullets after two years because you haven't made yourself and your investors wealthy, the expectations you set for yourself and your investors were way, way off.

Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#8

Post by albedo »

This is part of what we were trying to avoid while starting Lambda (http://getlambda.com). Do contract work to bootstrap your company, especially for technical founders. It's very much worth it to take 1-3 months off to freelance, make ~$20-50k, and keep your entire company.

Re: Friends and Family Funding and Why I'm Dreading Thanksgiving

#9

Post by wdewind »

7Figures2Commas wrote: post #7

> I’m deep into my second pivot, and haven’t yet delivered an exit two years after that initial money. Haven't delivered an exit after two years?!? What's wrong with you?!? Sarcasm aside, while taking money from friends and family may not always be desirable for a variety of good reasons, the problems that arise from it are usually the result of unrealistic expectations. Most companies never achieve an "exit", the av…

I don't think he means exit in the sense of IPO or sale to PE. I think he means exit for his initial f&f investors. It's not entirely unreasonable to expect a larger seed round or even a series A after 2 years.
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