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Ask friends; ask family
Ask friends; ask family
Owner: Natalie MacNeil
Business type: Digital media company

For my first media and marketing company, I invited a group of family and friends to "buy in" to the business, by investing between $500 and $1,000 in exchange for five- to 10-percent equity.

I like to look at it as intimate crowd funding before crowd funding websites like Kickstarter became popular. It worked at the time because we needed $5,000 to finish building our first product, a networking service for entrepreneurs called Garage Entrepreneurs. As young entrepreneurs, we did not have the money to build it on our own.

This approach can help you generate cash early on in your business and give family and friends the opportunity to earn a return on their investment.

While the business ultimately failed, I'd consider using this funding route for future ventures and projects. The important thing to remember with the family buy-in is to have proper contracts in place and always tread carefully when doing business with the people closest to you. There is always the risk it could end badly!


By Scott Gerber, contributing writer @CNNMoney - Last updated November 22 2011: 5:59 PM ET
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