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CURRENT ISSUE VOLUME 19 NO. 3 MAY/JUNE 2008
 Flow
"Love" Money
By Ross Finlay
After you've maxed out your credit cards, re-mortgaged the house and sacrificed the annual ski trip to Aspen to finance your start-up business, it is finally time to go to others for risk capital. To move forward now, you will have to find out if all of those kisses and hugs you put up with from your wealthy great-aunt were worth it. Yes, it's time to put the touch on your friends and family.
There are good reasons why you should start with people you know. First, outside investment will be much more difficult to attract if you can't demonstrate that your friends and family have faith in you. Second, they can be easier to pry money from than a lending institution. Third, it will be "patient" money.
As necessary as this is however, it can also come with strings attached: emotional pressures and well meaning but disruptive interference in day-to-day management can be a problem, particularly if things start to go wrong. Also, the cash resources of your friends and family are likely to be limited, and this means that your loved ones will be far less likely to be in a position to make further investments if the need arises.
The above excerpt was taken from the most recent issue of Atlantic Business Magazine. Our complete editorial content is available in print form only. To receive a free subscription to Atlantic Business Magazine,
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