Things to Consider Before Asking Friends and Family to Invest In Your Venture

Editor's Note: Charles Moldow is a general partner at Foundation Capital, focusing on consumer Internet companies. He was previously a founding executive at TellMe Networks and at @Home. Friends and family can be an essential source of funding for fledgling entrepreneurs. Sometimes, they are the only source.?But before you ask for funding, you have to ask yourself some tough questions, and one in particular: "What happens if I lose their money?" It happens all the time. It happened to me, and it forced me to learn hard lessons that can hopefully prevent other entrepreneurs from making the same mistakes.?Before I became a venture capitalist, I was an entrepreneur with a new endeavor that I firmly believed in. I was wildly optimistic about the future and was eager to bring in friends and family to help get the company off the ground. I dreamed of the day when the company would become successful and make a big profit for those closest to me. And then I lost their money. All of their money.

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