Should You Take Investment From Friends And Family?

“My friend Kumar is interested in this product. He is willing to fund the part of initial development by investing in the company. What is the best way forward?” Yash was excited. Finally, he could find someone willing to put money into his idea.

“Has he invested in other companies before? Does he know all the pluses and minuses?” That was my immediate question. “Your friends will be ready to invest, because they trust you, and expect that you will be able to return their money.”

Many times, people want to invest money in a new idea. It must be an informed decision. The option to invest in a startup is a high-risk, high-reward game.

–       When the idea becomes successful, you will get a huge return. One should be aware that a lot of factors affect the return.

–       In most cases, you may get some returns, but not as much as you may get otherwise.

–       In the worst case you may lose all of it.

It is necessary for the startup founder to educate the first-time investor. It can be done easily by setting their expectations properly and by giving them an assurance that whatever happens with their investment will be the same as what will happen to mine.

“Are your investors ready to make the right choice?”