I was reading through the history of this topic on this sub and I’m curious about something that doesn’t seem to get mentioned…

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gladtobeelect

New member
So I’ll be launching a product in the next 4 weeks or so and my cofounder and I have a convenience that most don’t get. Actually we have two.

1 we’re married to our target market, which own their own practices and will be our first customers. This helped us beta test, find problems, and features they were more excited about than others. Essentially, about as close to product market fit as it gets with pretty little effort.​


2 we don’t need venture capital or any type of fund raising, but have access to it.​


So, statistically speaking we will likely fail anyway. However, hypothetically speaking, let’s say we are reasonably certain we can make it to a lucrative exit point at the very least.

Should we offer an opportunity for friends and family to invest at all? Technically only two of them could be considered institutional investors and, as I understand it, makes them eligible to be offered a SAFE.

The reason I’m asking is because I’d be pissed if my close friend or family didn’t give me a chance to invest a little in their possible success.

Probably a pipe dream since the stats are pretty high on a failure but I figured it couldn’t hurt to play this hypothetical game.

Also, by no means am I thinking I’ve come up with a unicorn or anything like that. But I personally saw how pissed upper management of a construction company got when they weren’t offered the chance to buy the company when the original owner sold. It was only doing like 3 million in revenue, and they’d be buying their full time jobs essentially, so you’d be surprised at how mad some people get when not given a simple invite to invest.
 
@gladtobeelect
friends and family
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I wouldn't. They won't be professional investors and won't comprehend the risk level. Proper investors consider that their money is in the trashcan and IF they get any back 5-10 years later then that's a bonus.

Family and friends won't think like that. They'll wonder what happened to 'their' money and be mad at you for losing it. It's not worth the headache for $10k-$50k checks. You're also going to feel under too much stress to not disappoint them or lose their money. Unless they are literally a multi-millionaire and $50k really is nothing to them.

Regular people should invest their money in stocks and real estate. Its that simple.
 
@gladtobeelect Great thinking. I also have a similar view. However, most people think differently. They just don’t care. Actually, most will likely ask you for jobs or loans or favor that likely won’t be paid, reciprocated or even acknowledged. The most common thing is to get little to no support from F&F. If it was easy, everyone would be venturing businesses out or side hustling with serious planning.

So yeah, you can offer, but don’t really expect them to buy. Since you don’t need it, even better. If you want to do it, cool, offer it, but highlight the real risks for those willing to have a go. Get your terms right so your relationship doesn’t rot.
 
@littlefish40 Yeah that’s kinda what sparked the question in the first place. The only two who classify as institutional investors according to the YC article I read about SAFEs are my boss at my full time gig and my uncle who have both offered money for a piece. Now, if I let my uncle participate and it works out in his favor then that’s going to piss off the rest of my family. Nobody has to know about my boss of course.
 
@manga006 Well, we didn’t build it for the exit, we built it because it solves a problem. The exit will happen no matter what. Whether it’s fail, or some form of success there will be an exit at some point.
 
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