From the course: Foundations of Raising Capital
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Borrowing from friends and family
From the course: Foundations of Raising Capital
Borrowing from friends and family
- Before there were institutional investors, how did companies get started? Without investment firms, entrepreneurs would often turn to the people already close to them and ask them for money. And still to this day, raising money from friends and family is pretty common early on when starting a company. But borrowing money from friends and family can be tricky. Even the term borrowing is open to interpretation. Do you need to repay that money? How much we need to repay if the company is successful? And with any investment, there are legal agreements to be made. I'm not a lawyer, and this is not legal advice. I recommend working with a registered attorney if you're considering investment. But if you decide that you want to explore receiving funds from friends and family, then it can take three forms: a gift, a loan, and an investment. Receiving a gift is pretty simple, but pretty rare. You're given the money and a repayment…
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