Should I Take My Friends Money?

UPDATE: Get updates to my Startup Journey by email, click here and see other posts related to my Startup Journey over here.


I quit to start my own company and in a few short weeks, I will have no paycheck.  That is scary.  I need money to build my startup and I have been losing sleep over it.

There are several options that I can pursue to raise some money and each one has its own pros and cons.


I could do some part-time consulting to cover my expenses.


  • I get to own 100% of my company.
  • I don’t have to deal with any investors.
  • Little financial risk


  • It takes my focus off building my company
  • It is not stable.
  • I have to constantly look for the next contract
  • It will cover my bills but won’t be sufficient to grow my company e.g. hire people, pay for services and “stuff”

Credit Cards & Personal Loans

I can just use credit cards and loans to fund the business and pay my bills


  • I get to own 100% of my company.
  • I don’t have to deal with any investors.


  • I will run out of money very quickly
  • Extremely high financial risk that affects my family and not just myself

Angel Investors and/or VCs


  • Access to lots of money (potentially)
  • The right investor can open doors that I don’t even know exist


  • I have to share my company with others
  • Finding the right investor is time consuming (pretty much a full time job)
  • I will be working with strangers.
  • Investors management overhead
  • The wrong investor can be a pain in the ass that can hurt me rather than help me

Friends and Family


  • Work with people I already know and trust
  • Opportunity to make money for my friends
  • Much easier to raise money than angel investors
  • Share my success with friends


  • Risk losing all my friends’ money
  • Managing multiple inexperienced investors
  • Risk of straining relationships that are very important to me.
  • Share my failure with friends

My Gut Feeling

I am leaning towards raising money from friends and family but it is not an easy decision.  I feel like it will be a huge burden and will be constantly worried about losing my friends’ money (and trust).  Although, I have a great deal of confidence that I will succeed but there is no guarantee that I would and it would suck to lose my friends’ money.  What do you think I should do?  Any thoughts?

UPDATE 2: Good discussion going on at hacker news