Business Advice

Investing in a friend’s business: The risks

If you’re considering investing in a friend’s startup but are having a few doubts, it’s important to not make any rash decisions. Whether you’ve grown a company before, or are also a first timer in investing, you have to go through the facts. You need to put on your business face and ask your friend:

What are the risks?
What’s the timeline?
Who else is investing?
How much have you already put into your business?
Will this impact out friendship in any way?
Are you doing this full time?

There are of course many other questions your friend will need to answer, but by asking these first, you’ll get a better feeling about how likely success is for the startup. You also have to forget your friend’s personality and how nice they are, but look at them as a businessperson or entrepreneur. It’s not just about having faith in the product or service, you also have to put faith in the individual, and ask yourself whether you feel you can genuinely help them succeed. Investing is a big decision; so take your time to really think things through.