Using friends to invest


I have developed a website idea but have no funds to get it started. I have told friends close to me about my idea and they love it..some have even offered to invest in the company. Im thinking I would need about 40k to build a website and do some market data research just to get started. I have already aproached major companies that are essential to the sucess of my site and they had interest but would like to see more proof that the site would work. I figured I would just build the site and provide results from the market research done. What should I offer as far as price of shares and what % of shares of the company should I offer?


asked Aug 5 '11 at 06:52
B Run
11 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

1 Answer


Sounds like you're on the right track. Some other things to think of as well: Are you planning to outsource the construction of the website or hire someone? How to promote the prototype to build users that validate the idea?

Fred Wilson, notable investor, wrote a blog earlier this year on Financing Options: Friends and Family

I'd suggest a cap that gives the friends and family around 10% of the
business if things work out. But that is just a suggestion. A 10%
interest will not be appropriate for every friends and family

Be sure to check out the comments as well. Most that partake in the comment thread are experienced entrepreneurs.
answered Aug 5 '11 at 20:47
314 points

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