Startups; Not a Family Business

 

I decided a few days ago to present or pitch to my family, not because I wanted investment (of course who wouldn’t!) but to show them the work and effort I’ve put into this project. A recent college graduate (female) in the middle east working on a startup will almost always look like a brat, and given my painful fear of any type of stereotype threatening me, I decided to present to my family… I am beginning to sense that this is more about me than them. Its about me proving myself to myself, showing me that I am doing it. Using as many resources and help as possible.

I prepared for what could possibly happen after the presentation. Option one: They don’t see the vision or get the stats in favour for a company such as Localppl. Option two: One or two family members like the idea, the one or two might also be willing to invest. Beware. Although family money seems like easy money, startups are not family businesses! Sure, accept the offer but don’t give too much equity, you end up losing grip of your vision and shareholders just want their money yesterday. The reason why I warn against this is because Family will support, whether you got something good going or not, and what you need is real world investment from a real investor to validate that your doing your work right and there something special there. Also it’ll help avoid awkward encounters with family if something does go wrong.

I decided for family member investors the equity caps at 4%. A small percentage is perfect for this stage (not even launched) when, hopefully, Localppl grows and negotiations are bigger, and you got insane traction, and you know investors are excited, then you can open the doors to family investors, preferably not. Another option is a good old loan, ask for the amount you need and pay them back over time.

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