Friends and Family Funding Your Startup?

Before you approach anyone about investing in your new venture, make sure you’ve done your homework with the help of trusted experts

I have started a new business and will be asking friends and family to invest. I plan to ask for at least $10,000 from each investor for a total of $100,000 in seed money. I will pay 6% interest over a five-year investment. Is this fair? Should I have a lawyer draw up a financial agreement for my investors?—A.L.

Full Story: http://www.businessweek.com/smallbiz/content/jul2006/sb20060712_036343.htm?chan=smallbiz_smallbiz+index+page_karen+e.+klein

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As an added suggestion to Entrepreneurs, be sure that you’ve talked with your state regulatory authority to make sure you’re meeting the legal requirements of your state when it comes to raising money. It is usually a simple process if you do it from the start but it can become a daunting problem if you try and do it after you’re talked with a number of people or raised money.
In Montana, the authority is the State Auditor’s office. Here is a resource for more info: http://sao.mt.gov/securities/capitalformationsba.asp

Russ