addressalign-toparrow-leftarrow-leftarrow-right-10x10arrow-rightbackbellblockcalendarcameraccwcheckchevron-downchevron-leftchevron-rightchevron-small-downchevron-small-leftchevron-small-rightchevron-small-upchevron-upcircle-with-checkcircle-with-crosscircle-with-pluscontroller-playcredit-cardcrossdots-three-verticaleditemptyheartexporteye-with-lineeyefacebookfolderfullheartglobe--smallglobegmailgooglegroupshelp-with-circleimageimagesinstagramFill 1languagelaunch-new-window--smalllight-bulblightning-boltlinklocation-pinlockm-swarmSearchmailmediummessagesminusmobilemoremuplabelShape 3 + Rectangle 1ShapeoutlookpersonJoin Group on CardStartprice-ribbonprintShapeShapeShapeShapeImported LayersImported LayersImported Layersshieldstar-shapestartickettrashtriangle-downtriangle-uptwitteruserwarningyahooyoutube

Re: [newtech-1] Structuring a "friends and family" round

From: JH
Sent on: Thursday, November 21, 2013, 9:40 PM
Second everybody's comments above.

The most important thing that an F&F round illustrates is that other people (read: people who know you) believe in you and are willing to back you with cash, not just with free services and words of encouragement.  Same goes for putting up your own cash.  (There have been very few instances when the entrepreneur + his/her family & friends were financially unable to do so, but that's by far the exception.)  It's a signal when entrepreneur + F&F don't invest.

Angels don't mind being the first "smart"/strategic money in or the first outside money in, but they want to know they're not the first ones to put up cash.

jonathan



On Thu, Nov 21, 2013 at 12:32 PM, Jonathan Vanasco <[address removed]> wrote:

On Nov 21, 2013, at 9:59 AM, Anthony Zeoli wrote:

> We talk a lot about fundraising here, but rarely do we talk about structuring a friends and family round. What are the pros and cons? Any examples of agreements? How do you structure this and how does it affect funding later on so it doesn't get messy for experienced seed or series A rounds later? Does the SEC have rules around this?

Every F&F round I've seen has been structured as a Convertible Note that gives a discount (on conversion) on top of the standard interest rate.  It's a much cheaper way to get money in and generally keep interests aligned.  There is minimal legal work do be done, because you defer all the annoying stuff ( valuation, stock issuance, misc terms,  etc) until the real financing round.





--
Please Note: If you hit "REPLY", your message will be sent to everyone on this mailing list ([address removed])
http://www.meetup.com/ny-tech/
This message was sent by Jonathan Vanasco ([address removed]) from NY Tech Meetup.
To learn more about Jonathan Vanasco, visit his/her member profile: http://www.meetup.com/ny-tech/members/3388613/
Set my mailing list to email me

As they are sent
http://www.meetup.com/ny-tech/list_prefs/?pref=1

In one daily email
http://www.meetup.com/ny-tech/list_prefs/?pref=2

Don't send me mailing list messages
http://www.meetup.com/ny-tech/list_prefs/?pref=0
Meetup, POB 4668 #37895 NY NY USA 10163 | [address removed]


People in this
group are also in: