How to Get Family and Friends to Invest in Your Startup Businesses
Most people don’t like asking family members and friends for money. It can be awkward, embarrassing, or frustrating. But you need to ask them if they want to invest in your startup business through an equity crowdfunding campaign. The good news is that it’s not as hard as you think. These five steps will show you how to get family and friends on board with your new venture.
Step One: Research equity crowdfunding and how it works. Most of the time, equity crowdfunding means that your friends and family will be investing in your company by buying pieces of equity (shares) in exchange for cash or other investments. If you don’t know much about this method of raising money, then research equity crowdfunding to learn more.
Step Two: Create a list of goals that you’d like to achieve before approaching anyone else to invest in your startup businesses. Make sure that your goals are realistic and achievable, yet challenging enough to motivate you.
Step Three: Decide how much equity each person will get in exchange for their investment. While most equity crowdfunding campaigns offer shares at a set price (such as $100 per share), it’s up to you what equity is worth. So, decide how many equity stakes each family member or friend gets based on the amount they’re investing into your startup businesses. Remember that some people may invest more than others, but everyone should be getting an equal stake of ownership in return for their investments. If anyone has concerns about the amounts after your campaign succeeds, just remind them that equity isn’t free money and they’ll need to work hard to see a return on their investments.
Step Four: Write an equity crowdfunding pitch letter and send it out. This is the best way for you to tell your family members and friends about how equity crowdfunding can help them invest in your startup businesses. Explain why they should trust you, what kind of reward they will get if the campaign succeeds, etc.
Step Five: Get started! All that’s left now is for you to find equity crowdfunding campaigns that are similar to yours and ask for advice from the campaign owners. There’s no guarantee you’ll get everyone on board, but with these steps, it will be easier than if you’d gone about trying to raise money in any other way.