Friends & Family Round

A "Friends & Family Round" is typically the first round of investment any young company goes through. While, strictly speaking, only an accredited investor is allowed by SEC regulations to invest in an early stage, non-public company, the reality is that most companies receive some level of initial investment from those closest to them, hence friends and family.

The amounts of money typically raised in a friends & family round are usually very small, just enough to bootstrap a company's initial operations or product manufacturing prototype. The hope is that, with this initial money and the inventory or product development that can take place with it, the sales that result would then begin to fund daily operations.

For technology companies, of the sort that one might read about, the friends & family round is just the first of many such fundraising rounds, followed later by a Series A and more. However, for the majority of small businesses, the friends and family round represents the only "outside" fundraising the business might do before taking on debt in the form of a small business loan or other.

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This page was last edited on 13 October 2020, at 09:47.