Startup Funding Series II: Love Money


This article is for startup founders who are looking to fund their business in order to grow and scale during the development stages. 

The great news is that you don’t have to figure out how to fund it all yourself! 

As part of the Startup Funding Series, we now want to dive into the field of ‘Love Money.’

Raising capital can come in many different forms, and in this article, we will laser focus on asking your friends and family for money to fund your startup. 

Love money is any money that a startup receives from your immediate close circles. This can include spouses, parents, family or friends. Consider it an efficient and easy next step!

There are three considerations to keep in mind when dealing with Love Money:

  1. Pitching your idea 
  2. Advantages of Love Money 
  3. Disadvantages of Love Money

RELATED: Funding Sources for Your Startup

Pitching your idea

Looking at your existing support network, who can you pitch your business idea to that can act as an initial investor? It’s important to seek an individual out that you trust and who will believe in you. 

Always plan ahead when you’re about to pitch! Speak to things such as why it’s a good idea to invest, prove how you will pay back the loan and have an exit strategy! 

Be clear and concise about what it is that you are asking. Is this a loan, an investment or a gift? Communicate your expectations in advance to ensure there is no confusion. 

Pitching your startup will allow you to gain confidence, and by the time you enter a boardroom full of investors, your startup pitch will be second nature. 

Your loved ones that are providing funding may even want to use the product or service themselves. The great news with this approach is that you also have an early testing period and your family or friends can help.

Advantages of Love Money

Love money is an easy way to get money without having to spend much time researching for external investors. 

And so, there are a number of advantages to seeking Love Money funding. 

To start, your support system may lend you the loan with a low or no interest rate. 

Friends and family are also more likely to stay at a supportive distance while you are growing the startup, unlike investors who may check in more regularly. 

Moreover, having loved ones invest can make you more committed to the success of your business as you will also want to provide them with a good return for their money.

Disadvantages of Love Money

As you are raising money, you also want to make sure that you don’t damage those relationships. Borrowing money can be a quick way to lose friends and damage family relationships if you are not mindful or careful about this process. 

Other disadvantages could include that people simply don’t have that much money lying around to invest in your startup. 

On the other hand, friends and family members may also want equity in your business. 

Even as you are raising Love Money, it’s important you treat the funding source as a professional relationship. 

Consider involving a lawyer and make sure to always fully explain the risks involved.

Funding for your Startup

Receiving funding can be one of the most challenging aspects of running your startup, and so the key is to understand all of the options you have available. 

This Startup Funding resource is here to help you as a guide. 

Following the tips and tricks and successfully applying each will allow you to exponentially expand your business to new heights. 

And so, Love Money can be a great resource to tap into that already exists in your close circles. 

Learn about our Incubator17 Program

Here at Altitude Accelerator, we know that building a startup can be difficult. That’s why we created a blog series called #HelpMeStartup designed to clear up some common confusions among first-time startup entrepreneurs. 

Register as a Altitude Accelerator client for free to get access to all our tech-startup focused programming and resources.

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