The Friends & Family round is probably one of the most controversial conversations I have with first time founders on a regular basis.
Here’s why you should ignore all the thought leadership and raise a F&F round:
Your first cash into the company should be your own. The first outside money should be from people in your immediate orbit. Your “Friends and Family”.
F&F money is usually easier to get, valuations are more favorable, and there are fewer strings attached.
If you already have a network of high net worth individuals, fundraising should be easy — just open up an AngelList RUV and scrape together a few thousand dollars per person.
If you don’t know many wealthy people (more likely for many founders) this is your opportunity to prove that you can withstand a lot of rejection — The stakes are low when your idea is just an idea. The more “no’s” that you hear, the more “yes’s” you will get.
The F&F round is proof to institutional investors that you’re capable of fundraising in the first place.
Most importantly, this serves as a proof of concept for your idea. Is the idea strong enough—are you compelling enough as a founder—to raise a quick $50K?
There’s only one way to find out.