What is friends and family investment?

• Cash flow challenge: I need early stage funding for my business, but I don’t yet qualify for loans or professional investors, so I’m considering turning to people I know.

• Perfect for: Entrepreneurs and startups at an early stage who are exploring informal funding options before seeking angel, venture capital, or bank finance.

Novuna helps businesses understand the role of friends and family investment and how it fits within wider equity and debt finance options. We compare providers and support you in securing funding as your business grows.

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What is friends and family investment?

Friends and family investment is when people in your personal network provide capital to help start or grow your business. This can take the form of a loan, equity investment, or a mix of both.

It’s often one of the first funding steps for startups that need cash to launch before they can access more formal finance options.

Benefits of friends and family investment

• Accessible funding - often quicker and easier to arrange than bank loans or investor deals.
• Flexible terms - agreements can be tailored based on trust and mutual understanding.
• Early support - provides crucial seed money to get an idea off the ground.
• Builds momentum - securing backing can help attract future investors.

Challenges to consider

• Risk to relationships - mixing personal ties and money can cause strain.

• Lack of formal agreements - without contracts, terms can be unclear.

• Limited funding size - amounts are usually smaller compared to professional investment.

• Equity dilution or debt obligations - depending on the structure, you may still give away shares or take on repayment commitments.

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When to consider friends and family investment

This type of funding may suit your business if you:

• Are at an early stage and need seed capital to launch

• Have a supportive personal network willing to invest

• Need funding quickly without lengthy applications

• Plan to use this as a stepping stone to more formal investment

Alternatives to friends and family investment

Other funding options include:

• Angel investment for early-stage external investors

• Equity crowdfunding to raise money from a wider audience

• Business loans or startup loans for more structured debt finance

How Novuna Business Cash Flow helps

Novuna helps businesses explore all available funding routes, including how informal options like friends and family investment can fit into a wider strategy. We’ll compare providers, advise on next steps, and ensure you’re prepared for growth.