- Not being strategic when asking friends and family for capital/equity. Do you want to ask 200+ people for small sums, or less people for larger amounts?
- Not documenting investments from family/friends. It helps to find a middle ground between getting an attorney involved when accepting seed capital from family/friends, and not documenting anything formally at all. A website like Lending Karma can help you document investments.
- Not showing the progress you’ve attained, in terms of milestones/prototypes. By showing family and friends that you put your blood, sweat, and tears into a product, with some kind of prototype, and clear goals, you generate trust and the feeling that the potential investor is investing in something other than just an “idea.”
- Not speaking to attorneys about drafting proper seed capital financing contracts.
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