Ask HN: Guide to Friends and Family Safe Investment?
For reference, I've only been working on my startup for 2 months and need only ~$10,000-$30,000 for the next 6-12 months. Its just me, and I live in a very low cost of living area. My family also has invested in family members a few times before, so its not something they are not accustomed to. I still would like to know some details, however.
1. What is the lowest amount worthwhile in a SAFE, assuming I trust the investor? $100? $1000? I don't intend to take money from cousins I hardly know, but if my brother wants to invest $500, that seems okay, even though it isn't all that much money. Is there an easy way to have a single representative for a large number of smaller investments?
2. What valuation cap and/or discount should I target? Some of my family just wants to support me and will trust me to give them a good deal, without negotiation. Problem is that I have no idea what's fair. I just need somewhat reasonable terms and I can give them to everyone.
3. For dealing with un-accredited family members, do I just need to talk to a lawyer to figure out details, or is this simpler than other HN posts and articles have made it seem? Can I use the 504/506 exceptions without much headache?
4. Others have given friends and family raises poor reviews in general, and said they seriously regretted them. Is this warranted? Should I be wary of this altogether? I don't think I have much choice, I have to get money from somewhere. I could reduce the amount raised to be just enough to find an angel or secure a larger investment from a single family member.