When it comes to raising money for a startup, every one talks about trying the 3F's first, friends, family and fools. But it seems like this is not really an option when you consider that they are non-accredited. Is it best to skip the 3F's and focus on Angels? Can anybody share their experience with raising funds from family and friends?
It depends on how ambitious your startup is. If you know you'll be getting money from prominent VCs and famous super-angels in the next 6 months, skip the friends & family.
If, on the other hand, your startup is more likely to look like a "lifestyle business" for a while, then go for the F&F money.
Of course your friends are not accredited investors. You may want to check the exact consequences with a lawyer, but what could happen is that they later sue you and pretend that you misled them in investing and want their money back. In theory it could happen. But by definition, they are friends & family, so they won't. Just don't get money from the soon to be ex-husband whom you never got along with.
I believe the best way is to be funded by your early customers :-) - gives you & others confidence in your business.
Non-accredited? Who cares?
The reason for the 3F's first is that the cash is available. If you try alternate sources of funding first, and go through the pains of continual rejection, you'll understand why people use friends and family - because they'll invest.