Funds from Yourself and Family

The most obvious source of funds for investing in your business venture is your own savings. You need to put your money where your mouth is, so to speak. If you yourself do not have confidence in your own venture, how then can you expect anyone else to have faith in your endeavor. Thus you need to invest a significant amount in your startup.

The next most obvious source of funds comes from your immediate family. Your parents are at the top of your list followed by your siblings, if any.  Getting your parents  or siblings to invest in your business reflects the support that they can provide in your hour of need.

The family investment can come in the form of a direct investment for a share of the business or a loan. The loan, in theory, means the family gets back the money over a period of time. However there are many instances where the loan never gets repaid.

Having said that, it is not necessarily true that your family must invest in your venture. There are good reasons as to why your parents should not put in money for you to try it out. The most obvious reason is the decision not to put all the eggs in one basket. The basket being your business venture. This is to prevent the failure of a business venture bringing the house down, so to speak. The second reason is that the family investment may be more of a moral support for you than based on a rational business decision.

Getting your family to invest makes it easy for you to raise money for your venture, giving you a false illusion that your idea is sound. Suppose you have a hard time convincing many parties to invest in your business venture. Based on feedback from these investors, you are more likely to seriously make sound adjustments to make it more viable. This is less likely to happen with family investment.

 

Invest and Launch

Capital Required

Funds from Yourself and Family

Funds from Friends and Relatives

Investors

Loans

Crowdfunding