Download the Free eBook Guide To Raising Capital From Family, Friends & Founders here: http://thestartupgarage.com/start-your-business-today/008b/ This book overviews best practices for raising money from the first people you go to — your family, friends & founders. Dealing with money in personal relationships can get a bit tricky. This book will cover fundamental concepts, legal issues and material you’ll need. It will help prepare you for the difficult conversations and in some cases enable you to avoid them altogether. I. Funding Timeline II. Achieving Milestones III. Common Practice IV. Bringing on a Co-Founder V. Approaching Friends and Family VI. Pitching Your Business VII. IRS Limits VIII. Who To Approach IX. Business Plan X. Request Amount XI. Promissory Note XII. Progress Updates If you need to discuss your funding strategy or business plan, schedule a free consultation with one of our startup experts (800) 385-7984 or visit our website: http://www.TheStartupGarage.com

1. h"p://www.thestartupgarage.com
Outline
of
Free
eBook

2. h"p://www.thestartupgarage.com
About
the
Author
TYLER
JENSEN
In
2008,
Tyler
founded
The
Startup
Garage
to
help
entrepreneurs
and
business
owners
achieve
success
in
their
business
ventures,
as
well
as
their
lives.
Tyler
is
a
serial
entrepreneur,
having
launched
or
help
launch
over
100
companies,
including
non-­‐profits
and
social
enterprises.
He
has
developed
an
extensive
network
of
business
relaIonships
to
help
founders
achieve
the
milestones
investors
care
about.
The
Startup
Garage
Team
has
helped
raise
over
$200
million
for
startup
businesses.

3. h"p://www.thestartupgarage.com
Table
of
Contents
I.
Introduc>on
§ Funding
Timeline
§ Achieving
Milestones
II.
Start
Raising
Capital
With
FFF
§
§
§
§
Common
PracIce
Bringing
on
a
Co-­‐Founder
Approaching
Friends
and
Family
Pitching
Your
Business
III.
Tax
Issue:
GiH
vs.
Loan
§ IRS
Limits
IV.
Selec>ng
Lenders
§ Who
To
Approach
V.
Materials
To
Prepare
§ Business
Plan
§ Request
Amount
§ Promissory
Note
VI.
AHer
The
Loan
§ Progress
Updates

4. h"p://www.thestartupgarage.com
Startup
Funding
Timeline
High-­‐growth
startup
funding
is
typically
split
into
three
rounds:
• Friends,
Family
and
Founder
(FFF)
capital
–
ranging
from
$25,000
to
$50,000
• Seed
Capital
from
Angel
Investors
–
ranging
from$250,000
to
$750,000
• Series
A
and
Series
B
capital
from
Venture
Capitalists
–
ranging
from
$3,000,000
to
$10,000,000

5. h"p://www.thestartupgarage.com
Achieving
Milestones
•
•
•
•
•
Business
plan
Personal
investment
CapitalizaIon
strategy
and
milestone
Imeline
Market
validaIon
Prior
success

6. h"p://www.thestartupgarage.com
Common
Prac>ce
According
the
Global
Entrepreneurship
Monitor
(Babson
&
London
School
of
Business),
$50
billion
to
$75
billion
is
invested
annually
by
friends
and
family
in
U.S.
startups.

7. h"p://www.thestartupgarage.com
Bringing
On
A
Co-­‐Founder
While
your
friends
and
family
present
a
great
opportunity
to
raise
capital
to
launch
your
business,
you
and
your
co-­‐
founders
should
plan
on
personally
invesIng
in
the
business.
Investors
at
any
stage
like
to
see
that
you
have
commi"ed
personal
funds
in
addiIon
to
sweat
equity.

8. h"p://www.thestartupgarage.com
Approaching
Friends
and
Family
By
taking
the
loan
seriously
and
presenIng
your
friends
and
family
lenders
with
the
legal
documents
of
a
legiImate
business
transacIon,
you
open
the
discussion
to
the
issues
that
are
unique
to
mixing
friends,
family
and
money.
Possible
issues
could
be:
•
•
•
•
DisappoinIng
Friend
or
Family
Member
If
Company
Fails
Unable
to
Keep
Up
With
Repayment
Calendar
“Favor
War”
Lender
WanIng
to
Manage
Business
OperaIons

9. h"p://www.thestartupgarage.com
Pitching
Your
Business
•
•
•
•
Approach
Pitch
Based
on
Type
of
Lender
Kitchen
Table
Pitch
vs.
Elevator
Pitch
Ask
Lender
for
Help
First
Exercise
PaIence
and
Maintain
RelaIonship

10. h"p://www.thestartupgarage.com
IRS
Limits
on
GiHs
If
you
and
your
lender
agree
to
a
loan
without
interest,
the
IRS
will
“impute”
interest
into
the
transacIon.
The
difference
between
the
loan
without
interest
and
the
loan
with
interest
will
be
counted
as
a
gih
from
the
lender
to
you.

11. h"p://www.thestartupgarage.com
Who
To
Approach
•
•
•
•
Experienced
Business
Owner
Financially
Stable
Trusts
Your
Work
Ethic
and
Judgment
Money
Does
Not
Cause
FricIon
in
Personal
RelaIonship

12. h"p://www.thestartupgarage.com
Materials
To
Prepare
• Business
Plan
• Request
Amount:
Formal
Funding
Request
and
Use
of
Funds
• Next
Milestones:
-­‐
Develop
Product
-­‐
Develop
Team
-­‐
Legal
and
IP
Requirements
-­‐
Market
ValidaIon

13. h"p://www.thestartupgarage.com
Promissory
Note
A
promissory
note
clears
up
any
confusion
or
misunderstanding
that
may
arise
due
to
the
unsophisIcated
nature
of
the
lender/
borrower
relaIonship.
What
Should
Promissory
Note
Include?

14. h"p://www.thestartupgarage.com
Progress
Updates
• Be
honest
with
your
lender
about
the
progress
of
your
business
• Based
on
relaIonship
with
investor,
decide
best
means
of
contact
to
communicate
updates
• Focus
on
the
milestones
outlined
in
the
business
plan
that
are
being
achieved

15. h"p://www.thestartupgarage.com
hQp://thestartupgarage.com/start-­‐your-­‐business-­‐today/008b/

16. h"p://www.thestartupgarage.com
Founder Resources & Information

17. h"p://www.TheStartupGarage.com