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This post is part of our Field Guide to DTC eCommerce Capital. Click the links below to read more chapters from the guide.
Friends and Family
Friends and family are exactly what they sound like. If you are fortunate enough to have family and friends who can invest and like you enough to do it, then this is a really good place to seek early funding.
- These “deals” are typically quick to close.
- Deals often require little to no pitching, decks, or due diligence, because there is inherent trust.
- Friends and family are often flexible about deal structure and terms.
- You can use easy-to-source legal docs like SAFEs and Convertible Notes.
- There is often limited “follow-on” capacity — in other words, your friends and family may not be able to support you past the first check.
- They typically offer limited to no industry expertise.
- They typically offer limited to no networking opportunities.
- There is limited to no social proof or validation for other investors.
- Anyone who can swing it!
- This is mostly a fit for early-stage companies. Your mom is eventually going to get sick of writing checks to you, and your rich uncle’s pockets probably only go so deep.