9. Friends & Family
This is one of the most common forms of startup funding in the world. Banks and investors often do not want to risk their money, but people that are close to you and believe in you and your skills might be willing to take a chance on your bright ideas.
As stated by Entrepreneur, these are the advantages and disadvantages of “Friends & Family” funding: “Upside: This is your best chance to secure money to get the business off the ground. If your friends and relatives don’t want to give you money, who will? If one or a few of them has business savvy, better yet. Bringing them on as investors transforms them into motivated advisors. Plus, they will likely be more forgiving than outside investors when it comes to your business’ ups and downs. Raising money from your personal network can also be a step toward securing money from future investors, because it demonstrates that you are grounded in a network of family and acquaintances who have already bought into the business plan. Downside: You risk lost friends and strained relationships with relatives. Your next holiday party won’t be as fun if half the people there think you fleeced them on a failed business venture, or are annoyed because you went on vacation before paying their money back. That is why it is best not to get too informal about the business relationship. Be upfront about risks, lay out the business plan that the money will fund, and put the rules behind the investment in writing.”