Best Practices for including funds from "friends & family"

November 12, 2021
by a professional from Cornell University in Boulder, CO, USA
Does anyone have any best practices to share from raising capital from both investors and "friends&family"? Any common pitfalls to avoid?
Always hear to avoid mixing the too but it seems like an easy way to plug any capital raise gaps. Curious about people's perspectives and experience with this.
from Tufts University in Jersey City, NJ, USA
Another thing to consider: Any investor has an equal ability to cause headaches irrespective of the size of their check. Generally you're best off keeping a streamlined cap table with fewer, more sophisticated investors. Family/friends are more likely to be unsophisticated and therefore potentially panicky, have unrealistic expectations, underestimate risk, and invest money that they can't afford to lose. Family/friends also might also think that their personal relationship to you entitles them to unscheduled, more frequent updates than your other investors.
from University of Denver in Denver, CO, USA