41–50 of 51 posts
I'm assuming you think the money would help fund the business and is needed, or you wouldn't be asking. Maybe to help incorporate, host the project, etc. So why not take it?
You said in a comment that they're a professional investor. I'd find a decent attorney that will work on a deferred retainer and do a quick convertible (there's no reason to go equity here) and keep your fees to a minimum.
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we did actually ask to meet and present it with him. We are interested in the funding and will need it shortly or we will become under capitalized in the next few months. We have been doing consulting work primarily to stay in business at this point, but we need to cut it off or else we can't dedicated enough time to our project. in regard to #3, this relative is an investor by trade. He has invested 150K this year i…
If he knows what he's doing and could help in more ways than just money, go for it. Else, pass on. Though, you should know that run4yourlives is right on this one. I've done it and couldn't regret more.
Also, it's fine to take "just money" rather than money with value add. As long as it's not dumb money.
There are probably millions of companies since the dawn of enterprise that took small amounts of money from friends and went on to be successful, often because of it.
This way you have cash in hand now, and details can be worked out as the product matures. If the house burns down you probably ending up owing maybe a $1000-2000 over the initial $25K, totally worth it for the freedom IMHO.
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If he knows what he's doing and could help in more ways than just money, go for it. Else, pass on. Though, you should know that run4yourlives is right on this one. I've done it and couldn't regret more.
Just because you did it and it didn't work out doesn't mean it's a bad idea. Your sample size is small. Also, it's fine to take "just money" rather than money with value add. As long as it's not dumb money. There are probably millions of companies since the dawn of enterprise that took small amounts of money from friends and went on to be successful, often because of it.
Now, I don't know how much experience you have, but taking money from family is stupid. A) they are biased. B) the familiy member will always be there, for the rest of your/their lives. C) the debt, therefore, will always be in your/their minds, especially if the "investor" lucks out of other investments. D) 25K is easily gotten from other sources.
When people say "don't use your own money" I think this includes family too. I'd much rather use mine than families.
So my advice: keep consulting, take his advice and leave his money. If it's a good idea, there'll be no shortage of money from outside sources.
I was in the same situation as you are; what we did was quite simple actually. Together with your investors, agree upon a valuation for your concept (this is basically the hard part; don't try to come up with all kinds of revenue/profits predictions, just come up with a number both you and your investor can live with, dont't over-rationalize it) and give your investor equity for his money. Done!
I am sure many of you can come up with thousands of reasons on why a lawyer should be involved; however the simple approach worked fine for us.
I am going to go against everybody else here and say: "do it"! I would prefer having friends and/or family involved in my venture over some random smuck any day! There is a downside to everything, but come on! Making it sound like mixing f&f with business is a sure recipe for disaster is cow dung.
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If he knows what he's doing and could help in more ways than just money, go for it. Else, pass on. Though, you should know that run4yourlives is right on this one. I've done it and couldn't regret more.
Just because you did it and it didn't work out doesn't mean it's a bad idea. Your sample size is small. Also, it's fine to take "just money" rather than money with value add. As long as it's not dumb money. There are probably millions of companies since the dawn of enterprise that took small amounts of money from friends and went on to be successful, often because of it.
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Again, they are aware of the fact this is a high risk investment and are prepared to call it a wash. They believe in what we are doing and that its going to be a good product for education. Isn't that what investment is all about?
You seem more interested in convincing people that accepting the money is a good idea. I'd say you're trying to do this because you know it's inherently a bad idea. I didn't spend three years studying psychology to learn nothing. You're blatantly conflicted, if you thought it was a good idea you'd have taken the money anyway. There's no reason you're on an anonymous news site asking advice and when people make commen…
Earlier quoted context omitted.
Just because you did it and it didn't work out doesn't mean it's a bad idea. Your sample size is small. Also, it's fine to take "just money" rather than money with value add. As long as it's not dumb money. There are probably millions of companies since the dawn of enterprise that took small amounts of money from friends and went on to be successful, often because of it.
Rubbish. The statistics on successful businesses show that he is more than likely going to fail. If you take the money, in all likelihood the investor will never see a dime. Now, I don't know how much experience you have, but taking money from family is stupid. A) they are biased. B) the familiy member will always be there, for the rest of your/their lives. C) the debt, therefore, will always be in your/their minds,…
Just because there is a high failure rate doesn't mean the funding is not worth it for both parties.
Earlier quoted context omitted.
Rubbish. The statistics on successful businesses show that he is more than likely going to fail. If you take the money, in all likelihood the investor will never see a dime. Now, I don't know how much experience you have, but taking money from family is stupid. A) they are biased. B) the familiy member will always be there, for the rest of your/their lives. C) the debt, therefore, will always be in your/their minds,…
That doesn't mean anything. The statistics on successful businesses might easily show that businesses that took money succeeded far more often than ones that didn't. And the overall statistics clearly show them to be +EV. Just because there is a high failure rate doesn't mean the funding is not worth it for both parties.
If the plan to make money is good, it's easy to get money, so why risk it? It's already a huge risk without involving your family.